# Headquarters — Full Article Corpus

Plain-text export of every article at https://www.tryheadquarters.com/blog. Generated at build time. Curated index: https://www.tryheadquarters.com/llms.txt

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# Metrc Reconciliation: Why Inventory Mismatches Become License Risk

URL: https://www.tryheadquarters.com/blog/metrc-reconciliation-why-inventory-mismatches-become-license-risk
Published: 2026-07-22
Summary: A Michigan processor just lost its license permanently. Among the findings: 32,250 vape cartridges tagged into inventory that weren't there.

A surrendered cannabis license does not come back. A Michigan adult-use processor gave one up permanently on July 13, under a [consent order](https://www.michigan.gov/lara/news-releases/2026/07/15/press-release-gcm-waypoint-to-surrender-processor-license-permanently-close-under-cra) specifying that it "shall not be renewed, reinstated, reissued, or reactivated, limited or otherwise, at any future date." Operations cease July 28.

The case also involved interstate transport, which is its own category of problem. The part that should concern every operator is what investigators say they found on the floor: a seed-to-sale system that had stopped describing reality, and had been drifting for a long time before anyone came looking.

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## Four Months From Inspection to Permanent Closure

The investigation opened in March 2026. Inspectors visited the facility on March 11. By June 4 the state had [issued a formal complaint](https://www.michigan.gov/lara/news-releases/2026/06/09/press-release-cannabis-regulatory-agency-files-formal-complaints-against-ground-control-michigan) carrying 12 counts. The consent order was signed July 13. Twenty-eight days after that, the business is closed for good.

Four months, start to finish. There was no remediation window and no negotiated path back to operating. The company pled no contest, waived its right to a hearing, and agreed the agency could treat the allegations as true for purposes of resolving the complaint. It admitted nothing, and none of the allegations have been adjudicated.

That posture matters legally. It doesn't change the operational lesson: by the time a regulator is on your floor comparing packages to your records, the window for fixing your data has closed.

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## What the Mismatches Actually Looked Like

According to the state's complaint, as reported by [Ganjapreneur](https://ganjapreneur.com/michigan-cannabis-brand-forced-to-close-after-investigation-finds-inventory-discrepancies-transport-of-products-across-state-lines/) and [MMJ Daily](https://www.mmjdaily.com/article/9858887/gcm-waypoint-surrenders-michigan-processor-license-after-interstate-transport-allegations/), investigators documented:

- **32,250 vape cartridges** that had been previously impounded by state police but were tagged as accepted into inventory
- **360 cases** of vape cartridges that were empty boxes
- **Two untagged one-liter bottles** of distillate
- **Hundreds of items** listed in the seed-to-sale system that could not be physically located
- Roughly **317 grams** of untagged marijuana biomass
- Products entered into Metrc as trade samples only *after* another state's regulators had already flagged them

Read as a list of infractions, this looks like a company hiding something. Read as an operating record, it looks more mundane. Nobody owned the job of keeping the system matched to the building.

Take the first item. Impounded product is a known, documented, dated event. Those packages should have been sitting in a status that made them unavailable. Instead they were transitioned to accepted, and somebody performed that transition, either deliberately or by working through a queue without reading it. Thirty-two thousand units went from "seized by law enforcement" to "available to sell" because of how a record was handled.

The trade-sample entries are the same failure wearing different clothes. When product enters Metrc only after an outside party flags it, the system has stopped recording what happened and started producing paperwork about it afterward.

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## Inventory That Doesn't Exist Still Costs You

Forget the compliance exposure for a moment. The financial damage lands whether or not a regulator ever shows up.

Hundreds of unlocatable packages means every downstream number built on that inventory is wrong. Availability quoted to buyers is wrong, so sales commits against product that can't ship. Reorder points are wrong, so purchasing either double-buys or starves a line. Margin analysis is wrong, because cost is sitting against units that will never generate revenue. And the balance sheet carries value for product that gets written off eventually, on someone else's timetable rather than yours.

Under 280E, cannabis operators already absorb a tax burden most industries never face, which means product that evaporates between the system and the shelf costs more here than the same shrink would in conventional CPG.

None of that requires an enforcement action to hurt. It just requires nobody noticing.

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## Most of This Was Visible From a Desk

Most of these findings did not require anyone to be in the building.

Impounded lots showing as accepted is a state-transition error, fully visible in Metrc to anyone reviewing status changes against known events. Hundreds of packages that can't be found announce themselves long before a physical count, as zero-movement exceptions: quantities that never change, month over month, while everything around them turns. Trade samples entered weeks late surface in any report measuring the lag between when an event happened and when it was recorded. [Divergence between Metrc, POS, and accounting](/blog/duplicate-skus-are-quietly-killing-your-cannabis-margins) is, by definition, a desk finding.

Two of them genuinely required eyes on product. You can't tell from a screen that 360 sealed cases are empty, and untagged distillate is invisible to any system precisely because it was never entered into one. No amount of data discipline substitutes for someone physically present.

That's two items. The rest were sitting in the data, waiting on somebody whose job it was to look. A physical count confirms a discrepancy the system has usually been showing for months.

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## Reconciliation Is a First-Tier Process

Most operators treat Metrc as a filing obligation, something you satisfy the way you satisfy a tax return. The ones who stay out of consent orders treat it as an operating system that has to stay true, which means boring, recurring work.

**Close entries same-day.** Every day of lag between a physical event and its record is a day the two versions can drift apart unwatched. You can measure that lag. Most operators never do.

**Treat status transitions as controlled decisions.** Moving a package into accepted, or out of quarantine, carries legal weight. It needs a reason and a reviewer, not just a permission setting.

**Tie out across systems on a fixed cadence.** Metrc against POS, POS against accounting, accounting against the distributor's records. Weekly beats monthly. The number worth tracking is how long a discrepancy survives before somebody catches it.

**Run exception reports nobody has to request.** Zero-movement packages, quantity variances, entries recorded more than 24 hours after the event, packages assigned to locations that don't exist. These should arrive on a schedule, not on request.

**Name an owner.** A person, not a department, whose performance is measured on whether the system matches the building.

The consent order that closed this business contained one operational requirement before the license could be surrendered: reconcile any inventory remaining in Metrc.

The last thing the state asked of this company was the habit that would have kept it open.

Common questions:

Q: Can inventory discrepancies actually cost a cannabis license?
A: Yes. A Michigan adult-use processor permanently surrendered its license in July 2026 under a consent order specifying it could never be reinstated. The investigation ran four months from first inspection to permanent closure, with no remediation window and no negotiated path back to operating.

Q: How often should Metrc be reconciled against physical inventory?
A: Weekly at minimum for high-velocity categories, with a full physical count monthly. Monthly-only reconciliation guarantees discrepancies surface after the period they originated in has closed, which is what converts a correctable data error into a compliance finding a regulator discovers first.

Q: What is the highest-severity reconciliation failure to guard against?
A: Unguarded status transitions. Product in a non-sellable state such as impounded, quarantined, or on hold should require a second approval before it can be transitioned. Most catastrophic findings trace back to one person changing a status while working through a queue without reading it.

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# The Most Expensive Sentence in Cannabis AR: "I Know the Guy"

URL: https://www.tryheadquarters.com/blog/the-most-expensive-sentence-in-cannabis-ar
Published: 2026-07-08
Summary: Cannabis is a handshake industry, and the handshake is financing the delinquency. Operators sit on receivables for six months to a year out of respect for the relationship, and by then most of the money is gone.

Cannabis is a handshake industry, and the handshake is financing the delinquency. Everyone knows everyone. The retailer who's 90 days past due was at your launch party, and the account your sales rep won't let you call is the reason he made quota last year. That closeness built the industry. It's also why operators sit on receivables for six months to a year before doing anything, and by then most of the money is gone.

The math on waiting is well documented. [Industry recovery data](https://www.kaplancollectionagency.com/debt-collection-2/50-commercial-debt-statistics/) puts the odds of collecting an invoice at 90 days past due around 70-80%. At six months it's 45-55%. At a year, 20-30%, and every week of inaction shaves roughly another point off. So the operator who waits eight months out of respect for the relationship has quietly turned a collectible receivable into a coin flip. And as we covered in [Sales You Can't Collect Aren't Sales](/blog/sales-you-cant-collect-arent-sales), the tax on that revenue came due months ago regardless.

## Why Operators Wait Anyway

Nobody waits eight months because they think it improves their odds. They wait because escalating feels like a betrayal, and the industry's structure makes that feeling worse.

Start with the sales rep, who owns the relationship and whose income depends on it. Ask anyone doing AR in cannabis what happens when they want to make a hard call to a delinquent account. What they'll describe is a negotiation with their own sales team before the retailer ever hears a word. So the delinquent account gets handled gently, month after month, while the invoice ages past the window where gentle still works.

Then there's reputation. The industry is small, word travels, and operators worry that escalating one account tells every buyer in the state they're difficult to work with. This fear runs exactly backwards. Retailers with limited cash triage their vendors, and the brands known for tight, consistent AR get paid first. The vendor who never follows up goes to the bottom of the stack. Being easy to owe money to is also a reputation.

And some of it is pride. It's the owner's money and the owner's relationship, so they want to collect it personally. Which is how a founder ends up spending months chasing an account that stopped responding in March, at the exact moment their attention was the scarcest resource in the company.

## The Test a Real Relationship Passes

A business relationship is mutual or it isn't one. A customer who buys your product, tells you when cash is tight, and works out a payment plan is a partner having a hard quarter. A customer who takes delivery, goes dark for four months, dodges every call, and resurfaces only when they happen to have money isn't protecting any relationship with you. They're using you as a free credit line, and the friendliness when they finally do pay is part of how they keep the line open.

The tell is communication rather than payment. An account that's struggling but responsive ("we're short this month, here's what we can do") is worth patience, because an update is an update even when it's a negative one. An account with money that ghosts is a different problem entirely, and every month of politeness extended to it costs recovery odds. Patience is an investment you make in accounts that communicate. It shouldn't be the default you extend to everyone who went quiet.

There's a harder version of this test, and it points at you rather than the customer. If losing the account feels unsurvivable, if "I need this customer" is the reason you won't send a final demand, then the receivable isn't the biggest problem on your books. Concentration is. A customer you can't afford to lose is a customer who controls your terms, and operators who take exceptional care of accounts that show them none are usually describing the length of their own runway.

## Escalation Is a Calendar

The way out of the relationship trap isn't aggression. It's making escalation impersonal before any specific account needs it.

That means an escalation path that exists in writing and runs on dates: reminder at day 5, call at day 15, terms paused at day 45, final demand with a hard date at day 75, escalation after that. When the policy was set in advance and applies to everyone, no retailer can take it personally, no rep can negotiate exceptions account by account, and no owner has to decide, angry and eight months late, whether today is the day the friendship ends. That decision got made calmly, once, before it was about anyone in particular.

It also means splitting the roles instead of the loyalties. The rep keeps the relationship, meaning the store visits and the reorders and the sell-through conversations. AR runs the process, on the calendar, every account the same. This split only works on trust in both directions: sales has to trust that AR won't torch a hard-won account with a clumsy call, and AR has to trust sales to pass along what they see in the field, because a rep who's in the store every week knows an account is in trouble long before the [aging report](/ar-relay) does. Where that trust exists, the old war between sales and AR becomes the best intelligence channel in the company.

One more thing, because in this industry the brand chasing retailers is usually also stalling its own vendors somewhere: the same rule applies in reverse. Call your vendors before they call you. Tell them what you can pay and when. Operators who communicate proactively through a rough stretch keep their supply relationships. The ones who go quiet teach their vendors the same lesson their retailers taught them.

## The Real Fix

Three things worth doing this month:

1\. Write the escalation calendar down and apply it to every account, starting with the ones opened next week rather than the ones already 200 days old. A policy adopted in advance is a process. A policy invented mid-dispute is a grudge.

2\. Grade every past-due account on responsiveness, separately from balance. Communicative accounts get worked with. Silent accounts get the calendar, regardless of history or golf.

3\. Check your concentration. Any account whose loss feels unsurvivable deserves a plan for reducing exposure to it, because that fear is priced into every late payment they make.

The relationships worth protecting in this industry survive a final demand. The ones that don't were never mutual to begin with.

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# Headquarters Partners with High Times to Help Cannabis Operators Staff Back-Office Roles

URL: https://www.tryheadquarters.com/blog/headquarters-partners-with-high-times-for-cannabis-staffing
Published: 2026-07-07
Summary: We're now featured on High Times for cannabis staffing - a dedicated page connecting operators to Headquarters for the back-office roles that keep cannabis businesses running.

We're now featured on High Times for cannabis staffing.

High Times has been the reference point for cannabis culture and industry coverage for over 50 years. As of this month, cannabis operators browsing hightimes.com can find Headquarters on a [dedicated staffing page](https://hightimes.com/staffing/), connecting them directly to our back-office staffing services.

For us, it's a straightforward signal: the industry's most recognized media brand chose to point its audience toward Headquarters when the topic is staffing the roles that keep cannabis businesses running.

## Why Back-Office Staffing, and Why Now

Most cannabis staffing conversations focus on the front of the house - budtenders, trimmers, delivery drivers. The harder problem sits behind the counter: accountants who understand 280E, AR specialists who can chase invoices in a market where credit terms routinely stretch past 60 days, inventory and compliance staff who can reconcile METRC against the POS without creating audit exposure.

These roles are difficult to fill for structural reasons:

- **Cannabis experience is scarce.** A bookkeeper who has never dealt with 280E or state-mandated seed-to-sale reporting has a steep, expensive learning curve.
- **Margins are compressed.** With wholesale prices falling in most mature markets, operators can't carry bloated G&A. Full-time hires for part-time workloads don't pencil out.
- **Turnover is costly in ways that don't show up on the P&L.** A departing controller mid-audit or an AR lead leaving with collections knowledge in their head sets an operator back months.

That's the gap Headquarters fills - trained, cannabis-specific back-office talent for accounting, AR management, inventory operations, and administrative functions, without the overhead of building those teams in-house.

## What It Means for Operators

If you're an operator, the practical takeaway is simple: the back-office talent problem is common enough, and painful enough, that High Times decided its audience needed a dedicated resource for it. Whether you find us through their page or ours, the offering is the same - cannabis-literate staffing for the functions where generic hires fail.

We're proud of the association. High Times has outlasted nearly every institution in this industry. Being their featured staffing partner puts Headquarters in front of the operators we're built to serve, at the moment they're looking for exactly what we do.

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# Sales You Can't Collect Aren't Sales

URL: https://www.tryheadquarters.com/blog/sales-you-cant-collect-arent-sales
Published: 2026-07-01
Summary: Operators are extending credit on terms no lender in America would accept, to counterparties no bank will touch, in an industry where the debt can't even be resold.

Under [Section 280E](https://content.govdelivery.com/accounts/USIRS/bulletins/3a591a2), federal tax is owed on revenue when it's booked, not when it's collected. A brand that ships $500,000 on net-30 terms owes tax on that revenue this quarter, even if the cash shows up 300 days later, or never. Operators are paying real taxes on phantom income while the money sits in their customers' bank accounts.

That's why the standard framing of extended terms undersells the problem. A $100,000 order on terms isn't a sale waiting to settle. It's a loan, and a uniquely bad one: no underwriting, no collateral, zero interest, and, because cannabis remains federally illegal, often no practical legal recourse across state lines. Operators are extending credit on terms no lender in America would accept, to counterparties no bank will touch, in an industry where the debt can't even be resold. The stakes are compounded by margins that leave no room for error: only 24.4% of U.S. cannabis operators are profitable on an after-tax basis, compared to [47% of U.S. employer firms](https://fred.stlouisfed.org/release/tables?eid=1240565&rid=1), and 280E compresses net margins to 5-12% before a single invoice goes unpaid.

## The Metric Nobody's Tracking

Most cannabis brands report sales the way retail reports foot traffic: a top-line win, independent of whether the cash ever showed up. Ask a sales team for its monthly number and you'll get gross bookings. Ask the same team for its collections-to-sales ratio (cash actually collected, divided by sales booked in the same period) and most can't answer. Nobody's calculating it.

That ratio, not gross sales, is the number that predicts whether growth is real. For a steady-state brand it should sit near 1. One caveat before anyone panics: a brand growing fast will run below 1 by construction, because this month's collections trail last month's smaller sales. A sub-1 ratio isn't automatically a red flag. The signal is the ratio falling while sales are flat, or the gap widening faster than the growth rate explains. A brand booking $500,000 a month with flat sales and collecting $350,000 is running a 0.7 ratio with no growth alibi, and that $150,000 gap isn't "aging AR" parked in a spreadsheet waiting to be worked. Once carrying costs are priced in, it was never a real sale to begin with. It just hadn't been marked down yet.

This is also where the complaints piling up on LinkedIn actually come from: retailers stretching payment to 90 or 120 days "if it gets paid at all," sales reps extending terms to hit a number with no read on whether the buyer can pay, brands matching competitors' looser terms to protect shelf space and then watching those terms stretch even further the next quarter. All of it traces back to the same root cause: nobody is tracking what fraction of booked sales actually land as cash, so nobody catches the problem until an invoice is already 90 days old.

## The Shelf-Space Trap Is Real. The Answer Is Pricing, Not Refusal

The obvious objection to "tighten your terms" is that terms are how shelf space gets won. Refuse net-30 and a competitor offers net-60, and now your product is off the menu. That objection is correct, and it's why generic advice to "just extend less credit" fails in cannabis wholesale.

The way out is to stop treating terms as a binary. Terms are a pricing decision. If a retailer's payment history says they pay in 90 days, the cost of carrying them for 90 days belongs in their price. At the double-digit effective cost of capital most cannabis operators face, carrying a $100,000 order for a quarter costs $2,500 to $4,000. A brand that knows this prices the slow payer accordingly, or offers an early-payment discount that beats what a factor would charge. A brand that doesn't is giving away free credit and calling it a sales strategy. You don't have to refuse terms to stop being the cheapest lender in the industry. You have to stop quoting net-30 prices to customers who behave like net-120.

## Why Booked Revenue Lies

The decay is measurable. A receivable 30 days past due is worth roughly 80 cents on the dollar in expected recovery. At 180 days it's worth 20 to 40 cents. Past two years, under 10. And recovering anything at that age typically means handing 25-40% of whatever comes back to a third party. Every month an invoice ages, the sale it represents gets marked down, whether or not the books say so.

280E hits the same receivable twice. The tax on the booked revenue was owed up front, and if the invoice eventually becomes a bad-debt write-off, the deduction rarely offsets cleanly what was already paid. By the time a net-30 invoice becomes a net-120 invoice, the margin it was priced at no longer exists. The sale has moved from profitable to breakeven to a net loss, but the income statement still shows it as revenue recognized on day one. [Booked revenue measures intent to get paid](https://viewpoint.pwc.com/dt/us/en/fasb_financial_accou/trg_revenue/trg_revenue_US/collectibility_13_US.html). It doesn't measure whether anyone actually did.

## What Sales-Aligned Collections Actually Looks Like

Operators who manage this well share three practices.

First, every account gets classified by actual payment history instead of gut feel or the sales rep's relationship with the buyer. The classification that matters most is means versus motive: an account that can't pay right now and an account that won't pay are different problems requiring opposite responses. The retailer who is genuinely short on cash but communicates gets a payment plan and a preserved relationship, because they usually come back. The retailer who has the money and ghosts gets escalated immediately, because every month of politeness costs recovery odds. Misdiagnosing one as the other is expensive in both directions: you burn a good account with premature aggression, or you spend six months being patient with someone who was never going to pay.

Second, sales compensation gets tied to collected cash instead of booked orders. Done naively, this backfires: reps stop selling to slow-but-reliable accounts that are perfectly profitable once priced correctly, and start sandbagging orders near quarter-end. The version that works uses holdbacks rather than clawbacks (the bonus vests when the cash lands, instead of being revoked on default), and pairs the comp change with the account classification above, so a rep selling to a finance-approved slow payer isn't punished for finance's pricing decision. The point isn't to make reps afraid of terms. It's to make the cost of terms show up in the same place the commission does.

Third, the tracking has to happen in real time, not once a quarter. A spreadsheet updated monthly can't catch a ratio sliding from 1.0 to 0.7 while it's still fixable, and it can't show aging buckets migrating (current invoices sliding to 30, 30 sliding to 60) which is the earliest signal an account is drifting toward trouble. A system that surfaces aging, contact history, and payment classification per account, updated continuously, turns the ratio from a year-end surprise into a number someone checks every week.

## The Real Fix

Three things worth doing this quarter:

1\. Calculate the collections-to-sales ratio monthly, adjusted for growth. Two consecutive months below 1 with flat sales means it's time to revisit terms and underwriting, before it turns into a bigger collections push.

2\. Reprice your slowest payers. Pull the ten accounts with the worst payment history and check whether their pricing reflects their real payment behavior. If a net-120 customer is paying net-30 prices, the carrying cost is coming out of your margin.

3\. Tie sales incentive compensation to collected cash, using holdbacks paired with account classification, so reps and finance are pricing the same risk instead of fighting over it.

Revenue realized beats revenue recognized. Until the cash lands, a sale is just an open question, with the product, the payroll, and the tax bill on the other side of it already spent.

Common questions:

Q: Why is booked revenue misleading in cannabis?
A: Under Section 280E federal tax is owed on revenue when it is booked, not when it is collected. A brand shipping $500,000 on Net 30 owes tax on that revenue immediately and may wait months for payment. Booked revenue overstates the business by whatever is trapped in aging receivables.

Q: Should sales compensation be tied to collections?
A: Yes, above a certain scale. Holding 20 to 30% of commission until payment receipt, with bad-debt charge-back on write-offs within twelve months of origination, aligns the sales team with cash. While commission pays on booked revenue, reps stay economically indifferent to whether the invoice is ever collected.

Q: What does sales-aligned collections look like in practice?
A: First contact moves before the due date rather than after it. A brief confirmation around Day 20 on Net 30 terms verifying the invoice was received, matched, and scheduled resolves a meaningful share of what would otherwise age, because much late payment in cannabis is administrative rather than adversarial.

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# The Cannabis Finance Tax: Why Your Back Office Costs 2–4x More and Never Catches Up

URL: https://www.tryheadquarters.com/blog/the-cannabis-finance-tax-why-your-back-office-costs-more
Published: 2026-06-17
Summary: Cannabis operators spend 16–20% of revenue on finance versus 4–6% for conventional retail, and the premium traps finance teams in permanent reactivity.

A vertically integrated cannabis retailer spends an estimated 16 to 20% of revenue running its finance function. A conventional retailer the same size spends 4 to 6%. That gap of 10 to 14 points isn't waste, and it isn't bad management. It's the structural cost of keeping a compliant finance department alive in an industry where the federal government taxes your gross profit, banks won't hold your cash, and every license you operate is its own separate set of books. Call it the finance tax. Operators pay it before they sell a single gram, on top of a 280E burden that already pushes effective federal rates toward 70 to 90% of gross profit.

The real cost isn't the dollars, though. It's what the dollars buy. A finance team this expensive spends almost all of its time on survival work: closing the books, reconciling cash, defending COGS allocations, untangling intercompany transactions. There's nothing left over for forecasting, modeling, or catching the next cash crunch before it lands. So the premium does two things at once. It squeezes already thin margins, and it locks operators into permanent reactivity at the exact moment the industry punishes that hardest.

## The 280E engine

No single rule bends cannabis finance further out of shape than IRC Section 280E. Because cannabis is still a Schedule I substance, operators can't deduct ordinary business expenses (rent, salaries, marketing, insurance) against federal taxable income. Picture two retailers with identical books: $3M in gross profit, $2M in operating expenses. The conventional one pays federal tax on $1M of net income. The cannabis one pays on the full $3M. [The Wall Street Journal estimates](https://www.wsj.com/business/cannabis-companies-profits-taxes-3f8bbee0) licensed U.S. cannabis companies hand over roughly $2.3 billion a year in federal tax they wouldn't owe under normal rules.

The [April 2026 DOJ order](https://www.federalregister.gov/documents/2026/04/28/2026-08177/schedules-of-controlled-substances-rescheduling-of-marijuana) changed less than the headlines made it sound. It moved state-licensed medical cannabis and FDA-approved products to Schedule III, which lifts 280E for those operators. Everything else, meaning all adult-use and recreational cannabis, stays on Schedule I and stays fully subject to 280E. The broader DEA rescheduling hearing only opens June 29, 2026, and that process could easily drag into 2027. For the retailers and vertically integrated adult-use operators who make up most of the legal market, nothing has actually changed.

In practice, 280E turns COGS maximization into a full-time job. Cost of goods sold is the only legitimate offset, so every defensible dollar of direct labor, cultivation inputs, packaging, and freight has to be classified, documented, and defended as COGS in a way no ordinary retailer ever has to think about. Operators using IRC 471(c) inventory strategies pile on Form 8275-R filings and a methodology that has to survive an exam. Operators in decoupled states like New Jersey carry separate federal and state positions and do the work twice. None of it produces a single insight about the business. It's compliance overhead, and it never lets up.

## Complexity by design

Cannabis operators don't get to pick a tidy corporate structure. States license at the entity level, not the brand level, so a group running cultivation, manufacturing, and retail across three states can find itself operating 9 to 15 separate licensed entities. Each one needs its own books, tax returns, bank account (where one even exists), seed-to-sale reporting, and payroll. Every transfer between them has to be priced at arm's length, papered with a transfer pricing agreement, then eliminated again at consolidation. For a 10-entity group, the eliminations alone can eat dozens of hours a month. A single-entity retailer does none of this.

Vertical integration stacks another layer on top. A grower is holding inventory as live plants in veg, plants in flower, harvested material, work-in-process extract, and finished goods, each with its own cost basis and its own way of going to zero. Plants die. Extract fails testing. Cultivation labor and facility costs have to be capitalized into the plant and split between deductible COGS and non-deductible overhead, with documentation an auditor can't pull apart. And under all of it runs the seed-to-sale reconciliation: every wet weight, harvest, and package move in Metrc or BioTrack has to match a financial entry, every single day. When the two don't agree, it isn't a bookkeeping slip. It's a compliance violation that can cost you the license. Off-the-shelf accounting software treats inventory as one line. Cannabis snaps it into a dozen.

Then there's the cash. Most banks still won't touch the industry, since the [SAFER Banking Act remains stuck in Congress](https://www.congress.gov/bill/118th-congress/senate-bill/2860), so operators run largely on cash. A professional cash management program runs $25,000 to $60,000 to set up and another $15,000 to $30,000 a year to keep going, before bank fees that often clear $500 a month per account. Cash means somebody reconciles register counts, vault counts, and deposits by hand every day, with two-person sign-offs to keep theft honest. Plenty of operators pay staff in cash too, which turns payroll into its own small compliance project. A retailer that takes cards never sees any of this.

## The audit premium and the 15-day close

The IRS audits cannabis businesses at [4.7 times the rate](https://thecannabisindustry.org/committee-blog-cannabis-companies-be-ready-and-prepared-for-an-irs-audit/) of comparable conventional companies. That one fact reshapes the whole job. A cannabis controller can't just close the month and move on, because every close has to be built as though an examiner will eventually read it: contemporaneous COGS documentation, records kept for ten years, written SOPs, sales and inventory logs that tie out. A conventional controller might give 10 to 15% of the month to this. A cannabis controller gives 30 to 40%.

And it all lands at month-end. Even in conventional industries, [half of finance teams already take six or more business days to close](https://www.cfo.com/news/50-of-finance-take-week-to-close-books-ledge-month-end-close-time-cfo-three-day-close-myth-/746085/). Now add seed-to-sale reconciliation, multi-stage inventory valuation, 280E expense segregation, activity-based payroll allocation, and entity-by-entity eliminations. A moderately complex operator's close stretches to 15 or 20 business days. When the close swallows two-thirds of the month, the forward-looking work is always the casualty. The rolling forecast, the scenario model, the SKU-level margin read. None of it gets done.

## The reactive trap

This is the point where the finance tax stops being a cost line and turns into a strategic problem. When the team is permanently a step behind, the things anyone could have seen coming show up as emergencies instead.

The damage is visible across the whole industry. [Verdant Strategies](https://verdantstrategies.com/blog/cannabis-cash-flow-how-to-forecast-track-and-stay-solvent-in-a-volatile-market) pegs unpaid invoices at around $4 billion, some real fraction of which traces back to [teams that can't keep AR moving while they're buried in compliance work](/blog/why-cannabis-operators-cant-pay-their-bills-on-time). [HBK counts roughly $3 billion in cannabis debt maturing in 2026](https://hbkcpa.com/insights/cannabis-debt-maturity-2026-strategic-guide/), much of it underwritten on rescheduling timelines that never arrived. The operators who modeled their covenants and watched their maturities walked into refinancing early and from a position of strength. The ones running reactively are learning about those maturities with no runway left to do anything about them.

It bites at smaller scale too. The operator who can't pin down 280E liability until the CPA finishes the return gets blindsided by a Q1 tax bill, right after Q4 inventory drained the bank account. The retailer with no 13-week cash forecast doesn't see the 4/20 build coming until the shelves are already short. The brand with no FP&A keeps promoting a product line that loses money once 280E-adjusted COGS is in the math, because nobody has time to run the numbers. And new taxes land hardest on the operators least able to model them ahead of time: [Michigan's 24% wholesale excise took effect January 1, 2026](https://www.michigan.gov/treasury/news/2026/03/17/michigan-treasury-releases-guidance), stacked on a 10% retail excise and a 6% sales tax.

## The way out

You can't repeal the finance tax. You can go after the reactivity it breeds, and the lever there is automating the rules-based work. Bank reconciliation, seed-to-sale matching, transaction categorization, cash application, AR and AP aging: this is repetitive, automatable stuff, and clearing it off the plate can give back 45 to 90-plus hours a month per role. Every hour pulled out of reconciliation is an hour you can put into forecasting.

That takes a cannabis-native stack, not conventional software duct-taped into shape. Metrc and BioTrack feeding the GL through an API. POS and distribution data from Nabis or LeafLink flowing straight into revenue and AR. Bank data that reconciles itself instead of by hand. All of it sitting on an ERP already set up for multi-entity consolidation and 280E allocation. Build the [controllership](/fa-services) data layer first, because FP&A on top of unreliable books is worse than no FP&A at all. Once the data is clean, the close compresses and the controller goes back to the part of the job that actually needs a person: judgment.

For operators under about $10M in revenue, building all of this in-house makes no economic sense. A cannabis-specialized eight-person finance team, full controllership plus FP&A, costs north of $850,000 a year in salary before you add a dollar of cash handling, software, or outside accounting. Cannabis-native outsourced providers like [Headquarters](https://www.tryheadquarters.com/fa-services) spread that expertise across a roster of operators and deliver the same function for roughly half the price. That frees up $400,000 or more a year to put toward growth, or toward the cash reserves that keep the next crunch from turning into a crisis.

The finance tax is real, and in a market with margins this thin it can be the thing that ends you. The operators who make it through the next credit cycle won't be the ones who spent the least on finance. They'll be the ones who stopped paying for reactivity and started paying to see what's coming.

Common questions:

Q: How much more does cannabis finance cost than conventional retail?
A: A vertically integrated cannabis retailer spends an estimated 16 to 20% of revenue running its finance function, against 4 to 6% for a conventional retailer of the same size. That gap of 10 to 14 points is the structural cost of operating under 280E with restricted banking and multi-entity licensing.

Q: Did rescheduling eliminate 280E?
A: Not for most operators. The April 2026 DOJ order moved state-licensed medical cannabis and FDA-approved products to Schedule III, lifting 280E for those businesses. All adult-use and recreational cannabis remains Schedule I and fully subject to 280E, which covers most of the legal market.

Q: What is the real cost of the cannabis finance premium?
A: Not the dollars, but what they buy. A finance team this expensive spends nearly all its time on survival work such as closing books and defending COGS allocations, leaving nothing for forecasting or catching the next cash crunch. The premium locks operators into permanent reactivity.

---

# A Cannabis Operator's Guide to Market Analytics Platforms (2026)

URL: https://www.tryheadquarters.com/blog/cannabis-market-analytics-platforms-guide-2026
Published: 2026-06-12
Summary: BDSA, Headset, Hoodie Analytics, and Lit Alerts look interchangeable from the outside. They run on different data, serve different users, and cost very different amounts. Here's how to match the tool to your actual question.

Most cannabis operators shopping for a market analytics platform aren't short on options. They're short on clarity about which question they actually need answered. From the outside, the four major platforms look interchangeable: dashboards, market share charts, pricing data, big menu coverage numbers. Underneath, they run on different data, serve different users, and cost very different amounts. A platform an MSO strategy team can't live without can be a bad purchase for a brand that just needs to know which dispensaries to call this week.

This guide maps BDSA, Lit Alerts, Hoodie Analytics, and Headset to the business question each one was built to answer. It isn't a ranking or a critique. All four companies have built something genuinely useful, and the differences come down to fit. If you're a brand, wholesaler, or multi-state operator who hasn't committed to a data tool yet, the goal is to walk into your first demo already knowing what to ask.

## First, Understand the Two Data Foundations

Almost every meaningful difference between these platforms traces back to one thing: where the data comes from.

**POS-verified transaction data** comes from direct integrations with retailers' [point-of-sale systems](/cannastack). It records what actually sold, at what final price, in what basket. It's the most accurate data available in the industry, but it depends on retailers agreeing to participate, and market totals are statistical projections built from a panel of participating stores rather than a count of every transaction in the state.

**Menu-based data** comes from crawling the public dispensary menus consumers already see on [Dutchie](https://www.dutchie.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog), [Jane](https://www.iheartjane.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog), and [Weedmaps](https://weedmaps.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog). It captures what's listed and at what price, refreshed throughout the day, no integration required. That makes it broad and fast. The catch: listed isn't sold. Sales figures derived from menu data are estimates, inferred from inventory changes. Lit Alerts' CEO has put typical accuracy for this kind of methodology at 70 to 90 percent, and the company's own FAQ describes its output as "a compass, not a GPS."

Headset and BDSA are anchored in POS panels (both added menu layers in 2024 and 2025 for breadth). Hoodie and Lit Alerts are anchored in menu data, though Hoodie supplements it with POS, ERP, and seed-to-sale integrations plus foot traffic signals to power its sales models. Neither foundation wins in the abstract. POS data buys precision. Menu data buys breadth and speed. Which one you need depends on what you're trying to learn.

## "How big is this market, where is it going, and how does my brand compare at the macro level?" → BDSA

[BDSA](https://bdsa.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog) is a market research firm first and a dashboard second. Founded in 2015 by alumni of the syndicated retail-tracking world (NPD, Leisure Trends), the company set out to give cannabis the same data infrastructure Nielsen and IRI gave traditional CPG, and the product suite still reads that way. The core assets: a POS panel covering 15 U.S. states with daily updates, a twice-annual consumer survey of roughly 20,000 respondents per wave, and a five-year rolling market forecast spanning more than 40 countries, updated quarterly. The metrics are CPG-native too. Velocity, %ACV, share of shelf. If your leadership or your investors grew up reading Nielsen reports, the vocabulary will be familiar.

This is the data most often cited in investor decks and market entry analyses. BDSA's forecasts (the firm projects the U.S. market reaching $44.4 billion by 2029) are reference points across the industry. And its Consumer Insights segmentation sizes not just current consumers but the "Acceptors" who haven't bought yet and say they're open to it. No transaction dataset can give you that demand-side view.

**Built for:** MSOs planning market entry, investors and lenders sizing opportunities, and brands benchmarking share and category position across states.

**Pricing signal:** Enterprise subscriptions are custom-quoted. The public reference points are one-time Brand Assessment reports at $3,500, Market Dashboards valued around $3,000 per year (free with [NCIA](https://thecannabisindustry.org/?utm_source=headquarters&utm_medium=referral&utm_content=blog) membership), and a free Dispensary Playbook tool launched in late 2025.

**You'll know this is your tool if** you're making a market entry or capital allocation decision and need numbers that hold up in a boardroom or a diligence process.

## "What are competitors pricing and stocking right now — and what changed overnight?" → Lit Alerts

[Lit Alerts](https://litalerts.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog) is the most deliberately simple platform of the four, and that's the point. Launched in Massachusetts in late 2023 and now covering 15 state markets across the Northeast, Mid-Atlantic, and Midwest (plus Nevada), it crawls public dispensary menus throughout the day and converts the changes into one flagship deliverable: a morning email, in your inbox by 6am, listing which accounts went out of stock, which are running low, which competitors dropped prices, and which products are moving suspiciously slowly. The pitch is operational rather than analytical. Your reps have a call list before the 9am stand-up.

Behind the email sits a full dashboard: distribution mapping, competitor price comparisons by store, estimated sell-through velocity, account prospecting filters with CSV export, an embeddable store locator for brand websites, and API access. All of it comes in a single tier. The company is unusually candid about its methodology's limits (estimated data, "a compass, not a GPS"), and equally candid about price, which is rare in this category.

**Built for:** Brand reps and lean wholesale teams in eastern and midwestern markets who need daily prioritization without an enterprise procurement cycle.

**Pricing signal:** The transparency outlier. $500 per state market per month, published on the website, with unlimited user accounts, no annual contract, and a 30-day free trial. A LITE alerts-only tier runs about $199 to $200 a month through partner channels like [Apex Trading](https://www.apextrading.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog) and [SpringBig](https://springbig.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog).

**You'll know this is your tool if** you want competitive intelligence showing up in your inbox every morning, priced so a single won account covers the subscription.

## "Which specific dispensaries are moving my product — and my competitors' — and where should my sales team focus?" → Hoodie Analytics

[Hoodie Analytics](https://www.hoodieanalytics.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog), founded in 2020 in Chicago, applies the CPG measurement playbook one level deeper than the state aggregate: at the individual store. The founding team comes out of IRI, Nielsen, NPD, SPINS, and Numerator, and the platform's signature metrics show it. Weighted distribution tells you what share of a market's dollar volume flows through the doors that carry you. Store-level velocity tells you how fast your product moves where it's actually stocked. Together, those two numbers answer something raw door counts can't: are you in the stores that matter, and are you winning inside them?

The data engine mines menus from more than 10,000 licensed retailers across the U.S. and Canada, roughly 9 million SKUs, and layers in POS and ERP integrations for regression-based sales modeling, plus anonymized foot traffic signals and demographic profiles for every dispensary. The practical output is tactical. Which dispensaries carry your competitors but not you. Which accounts are slipping. Where the next ten doors should be. Hoodie's modeled market data is credible enough that institutional equity research uses it for monthly U.S. market totals.

**Built for:** Brands focused on sell-in and sell-through, wholesale teams managing multi-state territories, and operators who want CPG-grade distribution metrics down to the individual door.

**Pricing signal:** No published pricing. The platform is demo-required and appears to be priced per module. Hoodie Connect, its retailer-brand inventory sync product, is free for retailers.

**You'll know this is your tool if** your bottleneck is territory strategy: knowing which doors to win next and which existing accounts need attention before they churn.

## "What's actually selling — verified at the register — and how do I act on it?" → Headset

[Headset](https://www.headset.io/?utm_source=headquarters&utm_medium=referral&utm_content=blog), founded in 2015 by the team that built Leafly, has the deepest transactional data infrastructure in the industry: roughly 4,000 direct POS connections across more than 30 point-of-sale systems, covering 50 legal markets in the U.S. and Canada. By the company's own measure, about 34 cents of every dollar spent on legal cannabis in North America flows through its platform. A 2025 expansion added 7,000-plus e-commerce menu endpoints, pushing total data sources past 11,000. POS data for precision, menu data for breadth.

Headset also goes further past observation into execution than anyone else in the category. Insights is the flagship intelligence product for brands tracking share, pricing, and category trends from verified transactions, with data current to yesterday. Bridge streams live POS and inventory data from consenting retailers to their brand partners. Bridge Nexus adds AI-generated purchase orders on top of that stream; the company reports an average 19.6 percent reduction in stock-outs, and its mFused case study describes vendor-managed inventory running across 300-plus stores with a 20 percent average sales lift. For enterprise data teams, Vault delivers the normalized dataset straight into a [Snowflake](https://www.snowflake.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog) warehouse, queryable from [Tableau](https://www.tableau.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog), [Power BI](https://www.microsoft.com/en-us/power-platform/products/power-bi?utm_source=headquarters&utm_medium=referral&utm_content=blog), or Python with no ETL work.

**Built for:** Brands that need POS-verified share and pricing benchmarks, distributors running replenishment at scale, and MSO data teams blending market data with their own.

**Pricing signal:** A free Retailer tier (premium from $250/month), Bridge from $25/month, and custom-quoted Insights and Vault subscriptions. Headset also publishes a fair amount of free public data, including state pricing benchmarks and its annual 4/20 live sales dashboard.

**You'll know this is your tool if** you need ground-truth sales data and want to do something with it operationally, not just look at it.

![Positioning map of BDSA, Headset, Hoodie Analytics, and Lit Alerts: market-level vs. store-level view on the vertical axis, strategic planning vs. daily action on the horizontal axis](https://res.cloudinary.com/dhtmyzerx/image/upload/v1781258668/analytics-platforms-quadrant-map_okhqej.png)

## The Same Four Tools, From Your Seat

If the four questions tell you what each tool is, here's what that looks like from where you sit.

**"We're a brand planning entry into a new state."** Start with BDSA. Market forecasts, category sizing, and consumer adoption data are what an entry decision runs on. Once you're in-market, Headset Insights becomes the operational complement for tracking how the launch actually performs.

**"Our reps need to know which accounts to call this morning."** Lit Alerts was purpose-built as a daily call-list generator. The 6am email turns hours of manual menu review into a prioritized account list before the workday starts.

**"We're live in three states and don't know which doors we're losing."** This is Hoodie's home turf. Weighted distribution and store-level velocity show precisely which dispensaries carry your competitors but not you, and which of your existing accounts are decelerating.

**"We're an MSO data team that wants market data inside our own warehouse."** Headset Vault delivers transaction-level data via Snowflake share with no ETL buildout. BDSA Direct Connect is the equivalent pipe if your priority is forecast and consumer-survey context rather than transactional depth.

**"We're a distributor drowning in manual reorder workflows."** Headset Bridge and Bridge Nexus are the most developed vendor-managed inventory tools in the category: live retailer inventory plus AI-generated purchase orders, with an ERP integration path through [Distru](https://www.distru.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog).

## Side by Side

A condensed view, with the caveat that coverage figures are company-reported as of mid-2026 and change frequently:

| | **BDSA** | **Lit Alerts** | **Hoodie Analytics** | **Headset** |
|---|---|---|---|---|
| **Core question** | How big is the market and how do I compare at the macro level? | What changed on competitor menus overnight? | Which specific doors should my sales team focus on? | What's verifiably selling, and how do I act on it? |
| **Data foundation** | POS panel + consumer surveys + menu layer | Public menu crawls + ML estimation | Menu mining + POS/ERP integrations + foot traffic | Direct POS integrations + e-commerce menu layer |
| **Coverage** | 15 states tracked; 40+ countries forecast | 15 states (Northeast/Mid-Atlantic/Midwest + NV); 3,000+ retailers | U.S. + Canada; 10,000+ retailers | 50 U.S./Canadian markets; 11,000+ sources |
| **Signature products** | GreenEdge, Consumer Insights, Market Forecasts | Daily alert email, Brands Explorer, API | Market Intelligence, Dispensary Analytics, Connect | Insights, Bridge/Bridge Nexus, Vault |
| **Pricing signal** | Custom; $3,500 one-time reports | $500/state/mo, published | Demo-required | Free–$250/mo retail tiers; custom Insights |
| **Calibrated for** | Strategy teams, investors, enterprise brands | Sales reps and lean teams | Brand and wholesale territory teams | Brands, distributors, MSO data teams |

## How to Actually Choose

Three heuristics cut through most of the deliberation.

**Match the tool to your most expensive open question.** Not every data gap costs the same. A wrong market entry call costs millions. A missed restock costs a few thousand. If your costliest unknown is strategic (which market, which category, how big), start with BDSA. If it's performance truth (what's really selling, at what price), start with Headset. If it's territory (which doors), start with Hoodie. If it's daily awareness (what changed), start with Lit Alerts.

**Match the tool to your team's altitude.** These platforms are calibrated for different users at different elevations. BDSA for the boardroom and the deck. Headset for the analyst and the supply chain manager. Hoodie for the sales director planning territories. Lit Alerts for the rep in the field on Tuesday morning. A common buying mistake is purchasing at one altitude and expecting it to serve another.

**These aren't mutually exclusive, but watch the overlap.** Operators with larger budgets routinely pair them. BDSA plus Headset is the common enterprise stack: macro context plus operational truth. Headset or Hoodie plus Lit Alerts adds a daily alert workflow on top of deeper benchmarks for a relatively small incremental spend. One caution before stacking subscriptions: BDSA and Headset both added daily menu-intelligence layers in 2024 and 2025 that partially overlap with what Hoodie and Lit Alerts do. If you already subscribe to one of the larger platforms, check whether its menu layer covers your need before buying a standalone tool.

And before committing budget at all, use the free entry points. Headset's free Retailer tier, Lit Alerts' 30-day trial, BDSA's Dispensary Playbook. A few weeks inside a platform answers fit questions no comparison guide can.

## The Question Comes First

These four platforms are less competitors than four answers to four different questions. The most productive first step isn't booking demos. It's writing down the unanswered question that's costing your business the most money right now, then matching the tool to it. Operators who do that buy once and use the platform daily. Operators who skip it end up with an expensive dashboard nobody logs into.

HQ helps cannabis brands turn market data into marketing and revenue decisions.

Common questions:

Q: What is the difference between POS-verified and menu-based cannabis data?
A: POS-verified data comes from direct point-of-sale integrations and records what actually sold at what final price, but market totals are projections from a participating panel. Menu-based data crawls public dispensary menus, which is broader and faster, but listed is not sold and sales figures are inferred estimates.

Q: How accurate is menu-based cannabis sales data?
A: Lit Alerts' CEO has put typical accuracy for this methodology at 70 to 90 percent, and the company's own FAQ describes its output as a compass rather than a GPS. That is useful for prioritization and direction, and insufficient for capital allocation decisions that need defensible numbers.

Q: Which cannabis analytics platform should a brand entering a new state use?
A: Start with BDSA for market forecasts, category sizing, and consumer adoption data, which is what an entry decision runs on. Once in-market, Headset Insights becomes the operational complement for tracking how the launch actually performs against verified transactions.

---

# We Tracked How a Cannabis Back Office Really Uses AI - Here's the Data

URL: https://www.tryheadquarters.com/blog/we-tracked-how-a-cannabis-back-office-really-uses-ai
Published: 2026-06-02
Summary: AI adoption across our back office went from 9% to 88% in five months. The activity data shows which tools teams actually reach for - and how cannabis operators can turn AI into real leverage.

Most commentary on AI in cannabis is guesswork - vendor surveys, conference anecdotes, and predictions about what teams might eventually do. We are in a position to do something different. We can measure it.

Headquarters runs the back office for some of the largest cannabis enterprises in the world, and we track application and URL activity across our teams through [Hubstaff](https://hubstaff.com/?utm_source=headquarters&utm_medium=referral&utm_content=blog), the productivity platform we use to see where working time actually goes. So we don't have to guess which AI tools our people reach for, how long they spend inside each one, or how quickly adoption spread. We have the activity data. Here is what it shows - and what it suggests for any operator trying to turn AI into real leverage.

## From 9% to 88% in five months

In January 2026, 9% of the organization used AI tools in a measured period. By May 2026, that figure was 88% - a standing start to near-universal adoption in a single quarter and change.

![Share of Headquarters team using AI tools, January 2026 (9%) to May 2026 (88%)](https://res.cloudinary.com/dhtmyzerx/image/upload/v1780421014/chart_1_adoption_curve_rs3otx.png)

Adoption that fast is not a procurement story. Buying licenses takes an afternoon; getting an entire back office to change how it works takes something else - which is exactly where most organizations stall. McKinsey's 2025 survey shows most organizations now use AI somewhere in the business, yet far fewer capture real value - BCG places only about 5% in the "future-built" cohort that sees outsized returns, while the majority report minimal gains. The differentiator is never the model. It is whether the work gets redesigned around the tool. The climb from 9% to 88% happened because specific workflows got rebuilt around AI, not because people were handed logins.

## Which tools the team actually reaches for

Adoption is not uniform across tools, and the split is the most instructive part of the data.

![AI tool usage by share of time spent: ChatGPT 28%, Claude 22%, Gemini 18%, Codex 14%, Perplexity 11%, Cursor 7%](https://res.cloudinary.com/dhtmyzerx/image/upload/v1780421014/chart_2_tool_usage_vq37yk.png)

ChatGPT, Claude and Gemini are the three most-used platforms. They are the general assistants and research grounding for daily work: quick answers, summaries, the first stop for fact-finding. They are the backbone, and for most people they are the entry point into using AI at all.

The agentic tools - Claude Desktop, Codex, and Cursor - are seeing the sharpest recent growth, and they are where the heavier work happens. A chat assistant answers a question; an agent completes a task, navigating and extracting and drafting until it hands back a finished artifact.

## Question that defines AI in cannabis

If the highest-value work is agentic, completed inside real systems, how do those agents reach the platforms where cannabis data lives? The answer is where cannabis diverges from the rest of the software economy, and most operators have not priced it in yet.

In mainstream commerce, the agent-native layer is arriving fast. Shopify now ships [built-in MCP support](https://shopify.dev/docs/apps/build/storefront-mcp) on every store by default - a storefront server an AI agent can use to search the catalog, build a cart, and hand back a checkout link, with no custom setup. BigCommerce offers its own [first-party Storefront MCP server](https://www.bigcommerce.com/blog/storefront-mcp/) for the same kind of agent-driven shopping. The pattern is consistent: the platform meets the agent halfway, and the integration is clean.

Cannabis platforms are earlier in that build cycle. Across dispensary POS, wholesale B2B marketplaces, and market-analytics providers, agent-native connectors are largely still on the roadmap rather than in production. This is not a knock on the vendors - [cannabis software](/cannastack) serves a smaller, more fragmented, heavily regulated market, and the [open standard behind these connectors](https://modelcontextprotocol.io) is itself less than two years old. The connectors will come. They are simply not here yet.

That leaves a gap between now and then. Operators who treat the gap as a reason to wait are leaving real, available gains on the table.

The bridge is browser-use. When a platform does not yet offer an agent connector, a browser-based agent can still operate the software the way a trained analyst does - logging in, applying the right filters, navigating to the correct report, and exporting the data. It is less elegant than a native connector and it requires thoughtful setup, but it works today, on the systems cannabis teams already pay for. Browser-use is how cannabis teams close the connector gap themselves, one workflow at a time, without waiting for a vendor release.

## Skills are the new SOPs

The tool is only half the story. The durable asset is the skill.

A skill is a documented, repeatable procedure that an agent executes - the standard operating procedure, except it runs itself. Instead of a static SOP buried in a shared drive that a new hire reads once and forgets, a skill [encodes](/blog/legacy-what-is-rag-20250625) the exact steps, context, and judgment of the team's best operator, and any team member can invoke it on demand. Tools change every quarter. The skill library compounds.

This is not a cannabis-specific insight; it is simply arriving in cannabis now. Bain & Company runs an internal "GPT Olympics" where employees have built more than 2,000 custom tools, with the best promoted into a firm-wide marketplace - one of them, "Answer Copilot," surfaces senior-partner expertise that used to live locked in individual inboxes. McKinsey built Lilli, a research assistant that synthesizes the firm's institutional knowledge for 40,000 consultants. The pattern is consistent across professional services: capture the repeatable expert work as a reusable asset, and the whole organization levels up.

The evidence that this lifts the floor, not just the ceiling, is strong. The landmark [BCG/Harvard study](https://www.thecrimson.com/article/2023/10/13/jagged-edge-ai-bcg/) of knowledge workers found that those using AI completed tasks 25% faster and produced work rated more than 40% higher in quality. The lowest-performing workers improved the most, gaining 43% against a 17% lift for top performers. Skills are how that effect scales: the best analyst's method becomes everyone's baseline.

## What it looks like on the ground

The clearest way to understand the cannabis AI playbook is to watch it run inside the departments where it has taken hold. In our organization, by Hubstaff's intensity data, the top departments by usage are **Marketing, Inside Sales, Engineering, Operations, and Recruiting.** Marketing indexes highest on usage. But Inside Sales shows the playbook most vividly, because its core workflow is the connector gap made concrete.

### Inside Sales: from data retrieval to insight

Market-analytics platforms - Hoodie Analytics, Headset, and LitAlerts among them - are where most competitive intelligence in cannabis starts. They aggregate menu and sell-through data across markets into the dashboards brands and retailers use to understand share, pricing, and velocity. They are genuinely valuable, and they are HQ partners.

The work of turning those dashboards into a partner-ready insight has historically been a retrieval grind. An analyst logs into each platform, applies a specific set of filters, exports raw CSVs, and only then begins the actual job - reconciling the data and shaping it into something a Head of Sales can act on. The retrieval consumes hours that should go to interpretation.

Browser-use collapses the retrieval step. Two skills now carry the load:

- A **data-extraction skill** drives the analytics platform through the browser - applying the right filters and pulling the raw reports automatically, across these platforms and others in the stack.
- A **competitive-insights skill** takes that raw data and applies cannabis-specific context - category dynamics, brand positioning, market-by-market nuance - to produce the actionable read a Head of Sales actually needs.

The analyst stops spending most of the cycle on retrieval and starts spending it on judgment. That is the connector gap closed by hand. It is also the pattern that travels best: find a report you rebuild constantly, automate the extraction with browser-use, and encode the interpretation as a skill.

### Marketing: the highest-intensity team

The applied results outside cannabis set the benchmark. BCG's 2026 study of CPG marketing leaders found that teams adopting custom GenAI workflows spent 25% to 40% less time on key marketing tasks and brought work to market roughly twice as fast, with documented marketing-ROI gains of up to 50%. Inside cannabis, the agency [NisonCo reported](https://zapier.com/blog/how-nisonco-fuels-business-growth-with-zapier-agents/) a 48% increase in weekly leads - from 270 to nearly 400 - while reducing its research headcount, alongside roughly $30,000 in annual savings from automating research, outreach, and follow-up.

This is the work behind the marketing team's outsized use of Codex and Cursor: generating email-template variations and surfacing [loyalty insights](/blog/4-20-2026-in-review-53-percent-retention-jump) at a volume manual builders cannot match. Around it sit skills for first-draft SEO content and product descriptions, and - distinctive to this industry - skills tuned to write compliant copy for a restricted category, where a careless health claim is a regulatory problem, not just a brand one. The human still owns voice, judgment, and final approval. The agent owns the draft and the grunt work.

### Recruiting: where AI ramps the new hire

Recruiting sits lower on the intensity chart, but it is where we have been most deliberate, because the stakes of a bad call are high and the work is repetitive enough to automate well. Three workflows are live:

- **Resume screening.** Rather than a recruiter eyeballing hundreds of resumes against a job description, a skill parses each one against the role's real requirements and returns a ranked shortlist with the reasoning attached, so a human can check why a candidate scored where they did. The recruiter reviews a shortlist instead of a pile.
- **Interview scoring for grounding.** Every interview is scored against the same structured rubric, so the evaluation stays consistent from candidate to candidate and interviewer to interviewer. The score is grounding, not a verdict. It gives the hiring team a shared, evidence-based reference point and flags where a gut read diverges from the rubric, which is usually where unexamined bias hides. A consistently applied structured rubric is one of the better-documented ways to keep individual interviewer bias out of the decision.
- **Sourcing and outreach.** Candidate research, background checks, screening-call summaries, and outreach sequencing - the high-volume work that used to eat a recruiter's week.

The BCG finding applies cleanly here: AI lifts the lowest performers most. A new recruiter equipped with the team's best screening and research skills works closer to a veteran's baseline from week one. The skill library is institutional onboarding that runs itself, and because the scoring is structured and the reasoning is always attached, the output stays reviewable rather than a black box.

### Engineering, Design, and Operations: the engine room

The agentic-coding tools live here. Cursor and Codex handle development work - and the [University of Chicago found](https://leaddev.com/ai/cursor-claims-its-tools-are-a-massive-productivity-hack-for-devs) that engineering teams defaulting to an AI coding agent merged 39% more pull requests with no rise in revert rates. Just as important, this is where the browser-use agents and skills that the other departments rely on actually get built and maintained. Operations runs the same agentic tools across client meeting transcripts - turning raw calls into extracted action items, sentiment scores, and customer-success follow-through - and leans on Claude for analytics and internal tooling. The engine room is what turns a clever one-off prompt into a skill the whole company can run reliably.

## Where to start

The connector gap is temporary. Cannabis platforms will ship agent-native connectors, and when they do, the integrations will get cleaner and faster. But the teams that build the browser-use and skills muscle now are the ones positioned to exploit those connectors the moment they land - and in the meantime, they are capturing the gains while everyone else waits.

For an operator deciding where to begin, the path is concrete:

1. **Inventory the stack.** List the platforms your teams touch daily and note which expose an agent-native connector and which do not. The "not yet" list is your browser-use opportunity map.
2. **Pick one high-frequency, measurable workflow.** The report you rebuild every week is the obvious first target - the Inside Sales extraction pattern generalizes to almost any recurring data pull.
3. **Build it as a skill, not a one-off.** Encode the steps and the context so the work is repeatable by anyone, and so it survives the analyst who built it.
4. **Measure against a baseline.** Capture today's hours-per-report and adoption rate before you start. The organizations that document the before-and-after are the ones that get from 9% to 88% on purpose.

The research keeps landing on one point: the value of AI does not come from the model. It comes from redesigning the work around it. In cannabis, where the connectors have not arrived yet, that redesign starts with a browser, a skill, and a decision not to wait for the vendors.

---

# The $7B Map: Pennsylvania, Virginia, and the MSOs Racing to Be Ready

URL: https://www.tryheadquarters.com/blog/the-7b-map-pennsylvania-virginia-and-the-msos-racing-to-be-ready
Published: 2026-05-21
Summary: Pennsylvania and Virginia are the next two adult-use cannabis markets on the East Coast. Together, they're the last expansion window of size left in the region, with combined annual sales projected to reach roughly $7 billion at maturity.

Pennsylvania and Virginia are the next two adult-use cannabis markets on the East Coast. Together, they're the last expansion window of size left in the region, with combined annual sales projected to reach roughly $7 billion at maturity. The open question isn't whether these markets open. It's which operators are ready when they do.

The timing just shifted. On May 19, 2026, Governor Abigail Spanberger [vetoed the Virginia legislation](https://www.marijuanamoment.net/virginia-governor-vetoes-marijuana-sales-legalization-bill-after-lawmakers-rejected-her-amendments/) that would have opened adult-use retail on January 1, 2027. Virginia's realistic launch now sits in 2028. That delay reshuffles the order.

Pennsylvania, despite its own legislative gridlock, is now the more plausible first mover. Either way, the operators that capture Day 1 will be the ones already capitalized, licensed, and physically in place. The race is to be ready, not to legalize.

## The $7 billion opportunity, sized honestly

Pennsylvania is the larger prize on every dimension. The state has 13 million residents, a $1.2 billion existing medical market across 186 dispensaries, and five legal-cannabis neighbors quietly siphoning consumer dollars. [FTI Consulting's base case](https://s43720.pcdn.co/wp-content/uploads/2024/06/FTI-PA-Adult-Use-Market-Economic-Impacts-06.17.2461.pdf) projects $2.1 billion in Year 1 adult-use sales, with a [high case at $2.8 billion](https://www.greenmarketreport.com/report-adult-use-cannabis-in-pennsylvania-could-hit-2-8-billion-in-sales/). New Jersey border dispensaries have reported that as much as 60% of their customers are Pennsylvania residents. That demand repatriates the moment Pennsylvania retail opens.

Virginia is smaller but underpenetrated in a way that matters. The state's 8.88 million residents are served by only 23 medical dispensaries, capturing roughly 4% of total cannabis demand. The legal market sits alongside an estimated $4.4 billion illicit channel. Projections range from $780 million in Year 1 to $1.9 billion at maturity, with the limited-license model concentrating early revenue in a handful of incumbents.

The knock-on effects spill past the two state lines. New Jersey ([projected $1.16 billion in 2025](https://newjerseystatecannabis.org/business/sales)) and New York ([$869 million in 2024](https://cannabis.ny.gov/system/files/documents/2025/06/2024-ocm-market-report-6-26-25.pdf)) will both absorb revenue cannibalization. New Jersey's northern and western dispensaries built customer bases on Pennsylvania crossover traffic, and that traffic reverses when Pennsylvania opens. Maryland, which [hit $99 million in monthly sales by April 2026](https://themarijuanaherald.com/2026/05/maryland-marijuana-april-2/), faces the same dynamic on its Virginia border. The East Coast cannabis map is about to be redrawn, and not every existing operator wins.

## The frontrunners

### Pennsylvania (largest medical footprint defines the winners)

**1. Trulieve.** 22+ dispensaries, the largest single-operator footprint in the state. [Spent $210,000 on Pennsylvania lobbying in 2024 alone](https://www.spotlightpa.org/news/2025/03/marijuana-cannabis-weed-lobbying-millions-recreational-legalization-pennsylvania/), the largest cannabis-company line item that year. The conviction is plain.

**2. Cresco Labs (Sunnyside).** 13 dispensaries across Pittsburgh, Philadelphia, and central PA. Disciplined operator with broad geographic coverage and real brand recognition in state.

**3. Green Thumb Industries (RISE).** The same conservative capital structure that funded GTI's Illinois dominance is available for the Pennsylvania conversion buildout.

**4. Curaleaf.** Multiple PA stores, the deepest capital markets access among MSOs, and a track record of acquiring conversion-ready assets ahead of launches. The likely consolidator if smaller PA operators stumble.

### Virginia (the only five operators that can legally convert)

**1. Green Thumb Industries (RISE) — HSA III, Southwest Virginia.** The only major MSO posting consistent net income. [$114.1 million in 2025 net profit on $1.2 billion in revenue](https://investors.gtigrows.com/news-releases/news-release-details/green-thumb-industries-reports-fourth-quarter-and-full-year-2024). Conservative balance sheet, a proven Illinois conversion playbook, and a $10M fee that's effectively rounding error. The benchmark.

**2. Jushi Holdings (Beyond Hello) — HSA II, Northern Virginia / DC corridor.** Six dispensaries in the highest-income, densest consumer region in the state. Premium pricing power, but the thinnest balance sheet of the five incumbents. If launch slips again, the $10M conversion fee gets materially harder to absorb.

**3. Verano Holdings (Zen Leaf) — HSA V, Hampton Roads.** [Bought the license from Cannabist for $90 million in 2024](https://www.cannabisbusinesstimes.com/us-states/arizona/news/15686542/verano-to-acquire-virginia-license-assets-from-the-cannabist-co-for-90m) and has openly told investors it's ready to convert. Zen Leaf already executed adult-use conversion in Maryland and New Jersey. Q1 2025 revenue was down 5% year-over-year, so Verano needs this market more than most.

**4. Curaleaf (gLeaf) — HSA IV, Greater Richmond.** [Acquired the gLeaf Virginia subsidiary for $110 million in early 2026](https://www.cannabisbusinesstimes.com/us-states/virginia/news/15773113/curaleaf-strikes-110m-deal-to-acquire-virginia-assets-from-the-cannabist-co), after initially backing out at the end of 2025. Five retail locations plus 82,000 square feet of cultivation. Largest U.S. cannabis operator by revenue at $1.27 billion. Capital access isn't the constraint.

**5. AYR Wellness / New AYR — HSA I, Northwest Virginia / Shenandoah Valley.** The wildcard. AYR's Virginia assets went through a [foreclosure sale in November 2025](https://www.globenewswire.com/news-release/2025/11/11/3185325/0/en/AYR-Wellness-Announces-Result-of-Article-9-Public-Auction-Initiation-of-Sale-of-Core-Assets-to-its-Senior-Lenders.html), and a restructured entity controlled by senior noteholders now holds the license. Lower-density region, restructured cap table, and real operational questions about Day 1 readiness.

## Two states, two models, and the question that matters more than the vote

Most headlines focus on whether each state will legalize. The more consequential question is how. Retail-model design determines whether multi-state operators capture the upside or get cut out entirely.

Virginia is heading toward private retail with hard caps. The vetoed bill, and any 2027 successor, runs a private licensing model with a 350-store cap, a $10 million medical-to-adult-use conversion fee per operator (payable over three years), and a five-license limit per entity for vertical integration. Combined tax rate lands at roughly 12 to 14%. Only five companies hold pharmaceutical processor licenses, one per Health Service Area, and those five will define the early market.

Pennsylvania is still arguing about the model itself. [HB 1200](https://www.mpp.org/states/pennsylvania/pennsylvanias-state-run-cannabis-stores-bill-summary-of-hb-1200/), the state-run framework that would have routed sales through the Pennsylvania Liquor Control Board, passed the House by a single vote in May 2025 and was [killed 7-3 in the Senate Law and Justice Committee](https://www.cannabisbusinesstimes.com/us-states/pennsylvania/news/15745789/pennsylvania-senate-kills-houses-cannabis-legalization-plan) a week later. The bipartisan [Laughlin-Street Senate framework](https://www.mpp.org/states/pennsylvania/pa-bipartisan-senate-cannabis-regulation-bill-sb-120-detailed-bill-summary/) and HB 20 both propose private retail under a new Cannabis Control Board, with a 12% excise tax.

The state-run model is the structural loser scenario for MSOs. Under HB 1200, existing medical operators could convert only if state stores ran short, which would relegate private companies to wholesale supply contracts with a single buyer. Brand equity and retail margins collapse under that architecture. Republican Senate resistance to HB 1200, ironically, is the most pro-MSO political force in the state today.

## The race isn't to legalize. It's to be ready.

We looked at [Maryland's July 2023 launch](https://governor.maryland.gov/news/press/pages/governor-moore-announces-more-than-11-billion-in-total-sales-during-for-first-year-of-cannabis-legalization.aspx) as the baseline. Roughly 100 existing medical dispensaries converted to dual-use on Day 1. Combined sales hit $1.1 billion in the first 12 months. Ohio replicated the pattern in August 2024 with [$90 million in adult-use sales over the first seven weeks](https://mjbizdaily.com/ohio-recreational-marijuana-sales-near-90-million-in-7-weeks/). In both states, the operators that captured the launch were the ones with the infrastructure already in place.

The first 12 to 18 months after launch is the highest-margin window the cannabis industry offers. Demand outstrips supply, license caps suppress competition, and consumer loyalty forms before new entrants can build. By the time new licenses issue 18 months later, incumbents have already taken the market.

The MSOs preparing for Virginia and Pennsylvania today aren't really betting on a launch date. They're buying optionality on the only two adult-use markets left worth fighting for on the East Coast, while accepting that the date will slip and the model may change. Whoever holds the conversion license on Day 1 collects the premium that follows.

---

# 7 Nabis Reports Every Cannabis Finance Team Should Be Reviewing Weekly

URL: https://www.tryheadquarters.com/blog/7-nabis-reports-every-cannabis-finance-team-should-be-reviewing-weekly
Published: 2026-05-14
Summary: Nabis powers a significant portion of cannabis distribution in California. These seven reports help finance teams turn platform data into a clean weekly view without hours of manual reconciliation.

Nabis powers a significant portion of cannabis distribution in California, and for most operators, it already contains an enormous amount of valuable data. The challenge for most finance teams isn't access to information - it's turning that information into a clean financial view without spending hours exporting reports and reconciling spreadsheets manually.

Operator-led brands in the $5–20M range feel this constantly. The operational numbers look healthy, sales activity is moving, receivables appear strong - but translating that into a clear understanding of upcoming deposits, margins, retailer payment behavior, and actual cash movement still takes work.

What follows are seven of the most useful finance and operational reports operators can build from their Nabis data each week. Some already exist within the platform in operational form. Others require layering additional calculations or combining multiple datasets.

## 1. Next Remittance Forecast

This is usually the most important number for finance teams to nail week to week.

The standard cash view inside Nabis provides strong operational visibility into receivables and order activity. Finance teams often need a more refined forecast that also accounts for fees, returns, credits, excise timing, and payment cadence tied to upcoming deposits. For a brand processing $400K/month through Nabis, that difference can reach $60–80K in a typical remittance cycle - meaningful when you're timing payroll or inventory POs.

The calculation isn't necessarily difficult, it just requires pulling together multiple moving pieces consistently:

* Invoices landing in the next remittance window
* Marketplace fees
* Expected returns and credits
* Excise timing
* Deposit cadence

Operators who build this report well make cleaner decisions around payroll timing, inventory purchasing, and cash planning.

## 2. Real Discount Percentage

Nabis tracks wholesale discounts extremely well from an operational pricing standpoint. Finance teams often need a broader net revenue view that also incorporates credits, free-fill replacements, damage adjustments, and miscellaneous concessions tied to retailer relationships.

Once those additional adjustments are layered in, the true effective discount rate is often materially higher than the standard wholesale discount line alone - a figure showing 8% operationally may translate closer to 14–18% once all downstream adjustments are included.

Calculation: *(wholesale discount + credits + miscellaneous discounts) ÷ gross sales*, sliced by retailer, by rep, and by SKU. The real value isn't just the percentage itself - it's the follow-up questions it forces: which rep is driving the highest credit volume? Which retailer consistently requires concessions? Which SKU carries the most margin pressure? That's where the more meaningful decisions usually live.

## 3. Year-Over-Year on Six Key Metrics

Week-over-week data tends to create noise. Year-over-year is the comparison that tells you whether the brand is growing, holding, or quietly shrinking.

The six metrics worth pulling against the same week last year: gross sales, net sales, order discount %, credit %, total discounts, and AOV. Nabis contains the underlying data, but most teams still need to export current and historical periods separately to build the comparison cleanly - which is why most brands can't quickly answer "are we actually growing" without a 20-minute exercise.

Two patterns tend to matter most: AOV down with net sales flat usually signals retailer working-capital pressure. AOV up with order count down usually means SKU mix has shifted. Both are useful indicators long before they become larger financial problems.

## 4. AR Aging by Retailer

Nabis exposes AR data well operationally. Finance teams benefit from seeing it segmented clearly by aging bucket and retailer behavior: 0–30, 31–60, 61–90, and 90+, sorted by retailer with the 60+ balances prioritized at the top.

California's BPC 30-day payment rule has been on the books since 2022, but many brands still struggle to operationalize collections consistently because the reporting workflow remains manual. Once the data is organized correctly, the collections list usually becomes obvious - five names, often the same five names every month.

## 5. Rolling DSO Over 90 Days

Point-in-time DSO snapshots rarely tell the full story. A 90-day rolling DSO is a trend line, and the trend is what matters.

Formula: *(AR balance ÷ net sales over the period) × 90.* Run it weekly and chart it. A gradual drift from 38 to 45 days over a quarter may not feel dramatic in the moment, but it means the business is quietly financing a substantially larger receivables balance than it was three months ago - and that money has to come from somewhere.

Rolling DSO also tends to be the leading indicator of future remittance pressure. The remittance forecast tells you what's landing next cycle. Rolling DSO helps explain why those deposits may be tightening over time.

## 6. Sales Rep Performance vs. Individual Targets

Team averages hide both top performers and underperformance inside the same number. The most actionable version of this report plots each rep's MTD or QTD revenue against their individual quota.

Nabis already surfaces revenue by rep. Layering in quota data - a five-minute addition since the platform doesn't store internal targets - transforms it into a much more actionable management tool. Reps sitting below 70% of target by week three rarely fully recover by month-end.

The report won't tell you whether the issue is coaching, territory allocation, compensation structure, or account mix - but it will tell you where to start looking.

## 7. Marketplace vs. Rep-Sourced Revenue

Every Nabis order carries an origin tag: marketplace, rep-driven, or reorder. Marketplace orders carry the full Nabis fee. Rep-driven orders carry fully loaded rep costs - salary, commission, benefits, and management overhead.

The exercise: split revenue by origin, apply the effective fee rate to the marketplace portion, and compare against fully loaded rep cost per dollar of revenue. The output helps operators evaluate hiring decisions, marketplace reliance, rep efficiency, and channel strategy. For most founders, this report produces surprisingly different conclusions than expected.

## The operational reality

All seven of these reports can be built from data already flowing through Nabis. The challenge for most finance teams is simply bandwidth. Exporting data, normalizing reports, layering calculations, and rebuilding the same spreadsheets every week is a real time commitment - and it's why many teams default to standard portal reporting. Not because the data isn't available, but because operational reporting and finance-ready reporting are often solving slightly different problems.

The operators getting the most value out of Nabis today are the ones building additional reporting layers around the data already inside the platform.

HQ built the [Nabis Plug & Play Dashboard](https://tryheadquarters.com/plug-play-nabis) specifically for that workflow - packaging all seven of these reports into a single executive summary view, refreshed daily from the Nabis API.

A limited 30-day pilot is currently available for qualified brands.

---

# 4/20 2026 in Review: What a 53% Retention Jump Says About Cannabis Retail

URL: https://www.tryheadquarters.com/blog/4-20-2026-in-review-53-percent-retention-jump
Published: 2026-05-06
Summary: Returning customers outpaced new customers by 53% on April 20, 2026, changing what the holiday actually does for cannabis retailers.

Returning customers outpaced new customers by 53% on April 20, 2026. This gap keeps increasing year-over-year, and operators without retention infrastructure feel the change the most.

BDSA tracked $159 million in U.S. cannabis sales on 4/20 2026, up 20% from $133 million the prior year. Jane Technologies, comparing same stores year-over-year, reported a 46.9% sales lift and a 46.6% transaction lift. Green Check (transaction network) recorded a 120% increase versus an average Monday and a 19% YoY gain in sales per CRB.

This year's calendar made the read unusually clean. 2024's 4/20 fell on a Saturday and inflated by default. 2025's collided with Easter and suppressed. 2026's was a Monday - no weekend multiplier, no holiday competition. What's left is a relatively noise-free read on what 4/20 actually drives. For dispensary operators and MSO leadership planning 2026 Q3-Q4 capital allocation, six findings matter more than the rest.

## 1. The Retention Inflection: 4/20 Is Now a Loyalty Validation Event

The defining behavioral data point from 4/20 2026 came out of Green Check's transaction network: returning customers outpaced new customers by 53%. In earlier years of the legal era, 4/20 functioned as the cannabis industry's largest annual acquisition funnel - the day curious or lapsed consumers tried a dispensary for the first time. In 2026, the majority of the day's revenue came from customers choosing to return to a specific store.

Industry data shows one-time shoppers account for 52% of customers but only 8% of revenue. Customers with 10+ visits drive 70%+ of sales. AIQ's certified-partner data shows loyalty members generate 3.6x higher lifetime value and shop 10.8% more frequently than non-members, and at many dispensaries loyalty members already account for over half of total revenue.

In summary, 4/20 2026 was not primarily a sales day. It was a loyalty validation day. The customers who showed up are disproportionately the ones who matter to next year's revenue line. The strategic implication is that 4/20 ROI cannot be measured by day-of revenue alone. The relevant questions are: how many loyalty members activated, what share of revenue came from top-tier loyalty cohorts, how many lapsed customers reactivated, and how many first-time visitors were converted into loyalty members at the point of purchase. Operators who measured 4/20 by traffic counts walked past the more durable scoreboard.

## 2. The Maturity Map: One Holiday, Three Different Markets

Market maturity is the most useful lens on 4/20 2026. License age, retail density, wholesale supply saturation, pricing levels, and consumer habituation all shape how the holiday performs. States cluster into three cohorts (mature, scaling, and emerging), and the holiday played out differently in each.

**Mature markets defended margins as revenue compressed.** California, the world's largest legal cannabis market, recorded $311 million in April 2026 sales on 17.3 million units sold. Year-over-year April sales declined 7.1%, and average item prices fell from $18.89 to $17.91, a 5.2% YoY compression. Jane Technologies measured California's 4/20 same-store sales at +25.8%, but that figure benefits from the easy 2025 comparison Easter created. The broader April trend is the more honest read. Colorado's 4/20 same-store sales declined 7.1% YoY in Jane's data, even as the state recorded a single transaction of $4,863. The premium customer segment persists in saturated markets even when the commodity tier has gone flat. Michigan offers the most pointed warning. With 840+ dispensaries and 1,000+ grower licenses serving roughly 10 million people, retail pricing has compressed to about $2.96 per gram, the lowest in the country. January 2026 dispensary sales fell 8.3% YoY despite record unit volume, the textbook price-volume trap. A new 24% wholesale tax effective January 1, 2026 added upstream cost pressure that the market structure may not let operators recover downstream.

**Scaling markets produced the strongest 4/20 percentage gains, but with caveats.** New York is the defining story of the 2026 cannabis landscape. Monthly sales hit $163.5 million in February, up 54.8% YoY. The state expanded from 41 dispensaries to over 300 by mid-2025 and is projected to exceed 625 retailers by year-end. Jane Technologies' +15.8% same-store 4/20 figure understates true growth because it deliberately excludes the rapidly expanding population of newly opened stores. Average item prices sit near $30.62, among the highest in the country, a function of supply constraints (fewer than 300 licensed cultivators versus Michigan's 1,000+). Illinois posted the strongest state-level 4/20 result in Jane's dataset at +44.5%, driven by limited-license discipline. With 242 dispensaries serving 12.6 million people, per-store revenue floors hold in ways saturated markets cannot match. Maryland gained 31.5%. New Jersey was the outlier. Despite crossing $1.15 billion in 2025 sales, Jane data shows New Jersey 4/20 same-store sales declined 1.1% YoY, and Lit Alerts confirms 4/20 does not rank among the state's top ten sales days. The cause was specific: an April 13, 2026 regulatory deadline pulled non-compliant hemp products off shelves a week before 4/20, disrupting consumer demand right when the holiday cycle should have been peaking.

**Emerging markets showed directional strength on small bases.** Ohio crossed $1 billion in adult-use sales during 2025, its first full year of legal operation, and posted +25.9% YoY 4/20 growth in Jane's data. Average item prices at $30.59 reflect supply constraints (37 licensed cultivators) that will ease as the state issues more licenses. Minnesota, with only 96 active retail sites against 1,400+ preliminary approvals, recorded a 150% same-store 4/20 gain. The directional signal is real. The magnitude is base-effect distortion.

| State | Cohort | 4/20 2026 YoY | Operative Dynamic |
| --- | --- | --- | --- |
| Illinois | Scaling | +44.5% | License scarcity, per-store strength |
| Maryland | Scaling | +31.5% | Steady Northeast expansion |
| California | Mature | +25.8% | Price compression, illicit competition |
| Ohio | Emerging | +25.9% | First full adult-use year |
| New York | Scaling | +15.8% | Rapid license expansion |
| New Jersey | Scaling | -1.1% | Hemp shelf disruption pre-4/20 |
| Colorado | Mature | -7.1% | Holiday gravity normalized |
| Michigan | Mature | -8.3% (Jan YoY) | Oversupply, price-volume trap |

The practical conclusion is that a 4/20 playbook built for California's dynamics will underperform in Ohio, and one built for New York will burn margin in Michigan. Strategy has to be calibrated to where each market sits on the maturity curve, not applied uniformly across a portfolio.

## 3. Discount Paradox: 85% Discounted, AOV Flat

Promotional intensity hit a record. 85% of 4/20 transactions were discounted, up from 80% in 2025. Cova's data from 2,000+ dispensaries shows 27.7% of transactions used a promo and 50% of retailers ran some form of discount, versus 10-11% on a typical day. At the portfolio level, margins held, declining only 0.8 percentage points despite the discount depth. The dispersion within that portfolio is where the actual story sits.

Average order value on 4/20 2026 was essentially flat (-0.6% YoY), and items per cart declined approximately 11% since 2024, the third consecutive year of decline in basket depth. More transactions, smaller baskets. Operators who simply stacked promotions and chased traffic eroded their AOV. Operators running engineered discount architectures held or grew it.

[BLAZE's 4/20 2026 retail report](https://www.blaze.me/blog/dispensary-tips/top-4-20-takeaways-for-cannabis-dispensaries-in-2026/) tells an interesting story: dispensaries using the BLAZE AI recommendation engine recorded a 56% AOV lift on 4/20 versus non-AI-assisted transactions on the same day.

The promotional architecture that separated winners from average performers was consistent across multiple data sets. House brand promos came first, preserving operator margin. Threshold-based offers ("spend $75, get $15 off") came second, protecting margin on small baskets while pushing incremental spend. Loyalty-gated exclusives came third, rewarding existing members and creating a visible enrollment incentive for new ones. Blanket store-wide discounts were a last resort rather than the headline. Operators who led with percentage-off-everything captured traffic and gave back margin in equal measure.

## 4. Product Mix Is a Retention Signal: Pre-Rolls, Edibles, and Beverages Are Eating Flower's Share

Pre-rolls reached 15.9% of total U.S. cannabis sales in Q1 2026 per Headset, up 9.8% YoY - the only major inhalable category gaining share. The category generated $3.6 billion in 2025 across 383 million units. Infused pre-rolls are doing the premium work; one brand reported 500% sales growth in its infused line from Q1 2024 to Q1 2026.

Edibles revenue rose 54% YoY on 4/20 2026 in Green Check's data - the single fastest-growing category in the dataset, outpacing flower's 40% gain. Beverages were the only major category posting positive YoY growth in California's declining April market: +8.0% in sales and +14.6% in units, against -10.6% for flower, -5.5% for vapes, and -3.8% for edibles. Average California beverage prices fell from $7.52 to $7.09, yet units climbed double-digits - a category actively expanding its consumer base, not just maintaining it.

Flower remained the 4/20 cultural anchor at 43% of holiday sales per Jane data, followed by vapes at 27%, edibles at 14%, pre-rolls at 10%, and concentrates at 6%. Even in markets like California where vapes dominate every other week of the year, flower leads on the holiday.

But the trend lines are clear: Convenience and effect-predictable formats - pre-rolls, edibles, beverages - are the categories that build loyalty cycles. They are dose-reproducible, easy to reorder, and ideal anchors for automated replenishment flows and loyalty tier thresholds. Operators planning 2027 merchandising should weight infused pre-rolls, edibles, and beverages disproportionately in their loyalty-gated assortment, and use flower as the cultural traffic driver it remains.

## 5. The 10/40 Problem: The Operator Gap Is Widening

Per [Green Check data](https://www.businesswire.com/news/home/20260422477424/en/Green-Check-Data-Signals-Cannabis-Market-Stabilization-as-420-Shifts-to-Loyalty-Driven-Event), top 10% of dispensaries captured roughly 40% of total 4/20/2026 sales. Up from 28% in 2024. This is not primarily a function of store count or location. It is the compound effect of loyalty infrastructure, data sophistication, and operational discipline showing up on the highest-leverage day of the year.

The median CAC for a cannabis dispensary loyalty member is $82, with top-quartile programs at $54.18. Loyalty members deliver 3.6x higher LTV and shop 10.8% more frequently. Even a $150 CAC for a loyalty conversion event clears positive expected value against the LTV multiplier. On 4/20 specifically, when a meaningful share of customers are first-timers, lapsed returners, or once-a-year deal seekers, the holiday is the lowest CAC window in the calendar year for loyalty acquisition. The customer has already self-selected into the experience. The conversion cost is the offer plus the operational lift to enroll them.

First Citizens Bank's 2026 State of the Cannabis Industry report shows 87% of surveyed cannabis companies expect positive revenue growth in 2026. That optimism is concentrated, not distributed. Whitney Economics forecasts U.S. cannabis revenue at $30.5 billion in 2026, a 4.9% gain after 2025's first-ever YoY decline. The market is growing. The share of that growth available to operators without loyalty programs, CRM infrastructure, or multi-channel marketing capabilities is shrinking. The 10/40 ratio is what that bifurcation looks like on a single day.

## 6. The 30-Day Window Most Dispensaries Are Wasting

The most underutilized strategic window in cannabis retail opens the morning after 4/20. First-time shoppers acquired on the holiday hit peak conversion probability in the first two to three weeks following their visit, then decay quickly. Most dispensaries do nothing in that window. A 4/20 first-time buyer who receives no follow-up communication has roughly an 8% probability of returning within 30 days at industry baseline. A first-time buyer enrolled in the loyalty program who receives a personalized SMS within 48 hours of their visit, followed by a targeted email sequence, converts at materially higher rates.

The mechanics are straightforward and underexecuted. Behavioral flows in Klaviyo or a comparable platform triggered on first purchase. Lapsed-customer reactivation segments built from purchase data, including what they bought, what they browsed but didn't buy, and which category they're due to repurchase. AI-personalized product recommendations that get smarter with every transaction the model sees. None of this is speculative. It is shipping product across multiple cannabis-friendly platforms. The constraint is operator execution, not technology availability.

For operators reading 4/20 2026 with a budget calendar in hand, the practical reframe is this: 4/20 ROI is measured in May. The day itself is a data acquisition event. The customer captured on April 20 (their email, phone number, first purchase profile, category preference) is the input. The 30-day reactivation sequence turns that input into a multi-year revenue line. Operators who treat 4/20 as a transaction lose the upside the data is offering them. Operators who treat it as the opening of a relationship are the ones already on the right side of the 10/40 split.

The market is bifurcating, and 4/20 2026 is the cleanest snapshot of which side of that split each operator is on. The next month is where most of this year's holiday value will actually be captured.

---

# How Vireo Growth Became the Story of 2026 Cannabis

URL: https://www.tryheadquarters.com/blog/how-vireo-growth-became-the-story-of-2026-cannabis
Published: 2026-05-01
Summary: Between January and late April 2026, Vireo closed or announced six separate acquisitions. The disclosed value of those deals exceeds $350M.

Six months ago, you could say that Vireo Growth was a regional operator with a few state licenses and a quiet balance sheet. Today it is the seventh-largest US MSO by revenue, with operating footprints in California, Colorado, Florida, Minnesota, Missouri, Nevada, New Mexico, and Utah, and it got there through one of the most aggressive consolidation runs the industry has ever seen.

Between January and late April 2026, Vireo closed or announced six separate acquisitions - [Schwazze's Colorado and New Mexico assets](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-Inc--Announces-Closing-of-Acquisition-of-Assets-of-Schwazze/default.aspx), [Hawthorne Gardening](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-Inc--Announces-Acquisition-of-The-Hawthorne-Gardening-Company-from-The-Scotts-Miracle-Gro-Company/default.aspx), Eaze, [PharmaCann's Colorado retail](https://investors.vireogrowth.com/news/news-details/2025/Vireo-Growth-Inc--Enters-into-Definitive-Agreement-to-Acquire-Certain-Assets-of-PharmaCann-Inc-/default.aspx), [FLUENT in Florida](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-to-Acquire-FLUENT-in-All-Stock-Transaction/default.aspx), and the [still-pending Flowery transaction](https://investors.vireogrowth.com/news/news-details/2024/Vireo-Growth-Inc.-Announces-75-Million-Financing-andAcquisitions-of-Four-Single-State-Operators/default.aspx). The disclosed value of those deals exceeds $350M.

## The Playbook

**Credit bids on distressed paper.** When [Schwazze's senior secured notes traded down](https://investors.vireogrowth.com/news/news-details/2025/Vireo-Growth-Inc--Announces-Closing-of-Acquisition-of-Outstanding-Senior-Secured-Convertible-Notes-of-Schwazze/default.aspx), Vireo bought them. Then it converted the notes directly into ownership of 45 dispensaries and two manufacturing facilities - a roughly $111M deal closed in March without writing a check for the equity. That structure is repeatable, and there is more distressed cannabis paper trading at discounts than there are buyers willing to take operating risk.

**All-stock consideration with disciplined dilution.** The [Eaze deal](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-Inc--Announces-Closing-of-Acquisition-of-Eaze-Inc-/default.aspx) (about $47M), the [FLUENT deal](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-to-Acquire-FLUENT-in-All-Stock-Transaction/default.aspx) (about $30M), and the [PharmaCann Colorado deal](https://investors.vireogrowth.com/news/news-details/2025/Vireo-Growth-Inc--Enters-into-Definitive-Agreement-to-Acquire-Certain-Assets-of-PharmaCann-Inc-/default.aspx) (about $49M) are all stock transactions. None of them required Vireo to deplete cash reserves.

**Strategic asset plays, not roll-ups.** The [Hawthorne acquisition](https://investors.vireogrowth.com/news/news-details/2026/Vireo-Growth-Inc--Announces-Acquisition-of-The-Hawthorne-Gardening-Company-from-The-Scotts-Miracle-Gro-Company/default.aspx) - closed in April, valued at roughly $120M - is the most interesting move on the board. Hawthorne is the cannabis-cultivation arm of Scotts Miracle-Gro. Vireo issued shares and warrants and received approximately $110M in cash and net working capital in return. That transaction strengthened Vireo's balance sheet rather than weakening it.

## Why This Is Bullish for the Industry

Cannabis M&A volume has been flat for two years. The 2026 surge - concentrated in Vireo but extending well beyond it - signals something new: capital is finding its way back into the industry, and the operators putting it to work are using structures that would not have been possible in 2022.

The largest disclosed deal of the year so far is [Millstreet Credit Fund's $130M cash acquisition of Cannabist's Virginia operations](https://www.businesswire.com/news/home/20260205531609/en/The-Cannabist-Company-Announces-Closing-of-Transaction-for-the-Sale-of-Virginia-Assets-to-an-Affiliate-of-Millstreet), which closed in February. Five retail locations and 82,000 sq ft of cultivation in Richmond, paid in real money to a real seller. Cannabist had a prior agreement with Curaleaf and walked away to take Millstreet's higher offer. That kind of competitive bidding tension was almost absent in 2024 and 2025.

Below the headline, the deal pipeline has been steadily active. [TerrAscend took a 35% stake in New Jersey's Union Chill](https://ir.terrascend.com/news-events/press-releases/detail/274/terrascend-increases-retail-footprint-in-new-jersey-with-closing-of-union-chill-dispensary-transaction) for $13M. [Planet 13 picked up a Strip-adjacent Las Vegas dispensary](https://www.cannabisbusinesstimes.com/us-states/nevada/news/15686441/planet-13-enters-agreement-to-acquire-las-vegas-dispensary) for $6.9M. [Cannabist's Florida exit totaled $16.4M](https://www.cannabisbusinesstimes.com/us-states/florida/news/15686483/the-cannabist-co-enters-164-million-definitive-agreements-for-florida-assets), including a [MINT Cannabis and Shango purchase](https://www.businesswire.com/news/home/20241106328681/en/The-Cannabist-Company-Announces-Closing-on-Sale-of-Florida-Assets-to-MINT-Cannabis-and-SHANGO) of Cannabist's Florida retail and cultivation portfolio. [SNDL committed $32.2M in cash](https://www.sndl.com/news/news-details/2025/SNDL--1CM-Provide-Update-Regarding-Arrangement/default.aspx) to acquire 32 retail stores from 1CM in a phased close. On the brand side, [Wyld's pending acquisition of Grön](https://www.globenewswire.com/news-release/2026/01/05/3212817/0/en/wyld-acquires-gr%C3%B6n-in-major-industry-transaction.html) creates an edibles platform with [combined revenue around $440M](https://www.highlyobjective.com/p/deep-dive-wyld-acquires-gron-undisclosed) - roughly twice the next-largest competitor.

[Forbes summarized the 2026 environment](https://www.forbes.com/sites/javierhasse/2026/01/20/cannabis-ma-didnt-vanish-its-just-not-happening-in-public/) with a useful line: "Cannabis M&A didn't vanish, it's just not happening in public." [Viridian's deal tracker](https://dealtracker.viridianca.com) confirms the read - total cannabis M&A value through late 2025 hit roughly $2.10B across 49 transactions, up from $1.17B the year before, with fewer total deals and meaningfully larger average deal sizes.

## What to Watch in H2 2026

First, the Flowery transaction. Vireo's binding MOU for the Florida operator has been pending for months and remains the largest unclosed deal on Vireo's docket. A close would extend Vireo's Florida footprint past 80 stores and accelerate its position ahead of any adult-use vote.

Second, rescheduling timing. Multiple buyers are already pricing rescheduling tailwinds into multiples. If the DOJ finalizes the Schedule III move in the first half of 2026, expect a second wave of M&A from acquirers sitting on capital waiting for that signal.

Third, the next credit bid. Schwazze will not be the last cannabis operator to default on senior secured notes. Whichever well-capitalized strategic acquirer is willing to underwrite the operating risk on the next one will likely pick up assets at multiples that make Vireo's 2026 run look conservative.

For an industry that spent two years being told it was in retreat, the deal flow tells a different story. The capital is here. The structures work. And the operators willing to move are building real scale on real terms.

---

# The Most Innovative Cannabis Products of 2026

URL: https://www.tryheadquarters.com/blog/most-innovative-cannabis-products-2026
Published: 2026-04-22
Summary: The cannabis brands innovating in 2026 aren't winning on novelty. They're innovating on formulation sophistication, form-factor economics, and retail channel evolution.

The cannabis brands worth watching in 2026 aren't winning on novelty. They're winning on formulation sophistication, form-factor economics, and retail channel evolution. The nine brands below are the clearest operator case studies we've seen this year. Each one is either redefining a category, setting a new quality standard, or proving a retail thesis that the rest of the industry will follow.

### Wyld - THC Sparkling Waters

Wyld is [#1 in edibles in seven states](https://www.headset.io/brands/wyld) (AZ, CA, CO, MI, OR, WA, NV), but the 2025–2026 story is the hemp-THC sparkling water line. Seven flavors across two dosing tiers, with cannabinoid stacks that pair THC with CBD, CBG, or CBC depending on the use case - Active, Mood, Bliss, Refresh, Restore, Bright, Chill. The formulation work (multi-cannabinoid ratios tied to named effects) is what sets this apart from the flood of single-cannabinoid hemp drinks.

Retail matters here too. Target's Minnesota THC beverage pilot [expanded to all 72 MN stores by April 2026](https://www.marijuanamoment.net/target-expands-involvement-in-hemp-thc-drinks-market-with-72-new-licenses-in-minnesota/), with Wyld as one of the flagship brands. That's the strongest mainstream shelf signal any cannabis-adjacent brand has pulled off this year.

### CAT4 by Catalyst - ECCO-Certified Top-Tier Flower

CAT4 is the rare case where the brand name is the testing standard. CAT4 panels screen for 144+ contaminants, compared to California's mandatory CAT3 panel of 66 pesticides ([SC Labs](https://www.sclabs.com/services/cannabis-testing-services-menu-ca/)). The hook isn't vertical integration - it's that you know exactly what you're smoking.

The credibility problem CAT4 solves is real. A Los Angeles Times investigation found that [more than half of legal cannabis products in California contain chemicals for which there is no public safety monitoring](https://www.latimes.com/california/story/2024-12-19/california-weed-cleanup). In response, Catalyst founder Elliot Lewis co-launched ECCO (Environmental and Consumer Compliance Organization) in late 2024, with monthly random dispensary-shelf audits and publicly published results. [Lewis's framing](https://www.greenstate.com/business/ecco-cannabis-cohort/) isn't subtle: *"If you don't meet the ECCO standard, you ain't medicine. And if you're selling poison, you ain't selling medicine."*

Selling exclusively through [30+ Catalyst California dispensaries](https://catalyst-cannabis.com/?utm_source=headquarters&utm_medium=blog&utm_campaign=most-innovative-cannabis-products-2026&utm_content=cat4) at entry-level pricing is the other half of the innovation: the cleanest product on the shelf isn't a premium tax.

### Protab (Level) - Cannabinoid Tablets

Protab has been the [#1 capsule brand in California](https://www.headset.io/brands/level) since Q4 2025, and the catalog is the reason. Protab 25mg comes in Sativa, Hybrid, Indica, CBD, CBDa, and CBG. Protab+ 30mg layers in effects-based multi-cannabinoid blends (Boost, Lights Out, Recover). Protab Max, Protab 50, and Protab 100 climb the dosing ladder. Tablingual adds a 5mg sublingual microdose tier. There's also a hemp-derived line available in all 50 states.

The depth here - one dose-controlled form factor, 20+ configurations - is the innovation. It's also a clean read on where the edibles/ingestibles market is heading: effects-first, cannabinoid-ratio literate, and no longer anchored to the gummy.

Founder Dr. Chris Emerson (PhD, small-molecule chemistry) [put it this way](https://usmanufacturingreport.com/article/level/): *"When I founded the company in 2015, no one was talking about effects-based product formulations."* A decade later, every serious operator is.

### Magic Cactus - THC Sparkling Prickly Pear

What makes Magic Cactus worth writing about is the positioning: it is explicitly *not* a cocktail mixer. It's an alcohol alternative. Founder Jonny Locarni lost his father to alcoholism in 2020 and built the brand on that premise - 10% of profits go to substance-abuse treatment organizations. [The full origin story](https://magiccactus.com/pages/our-story) is worth reading.

Retail footprint as of 2026: Sprouts Farmers Market in Texas and Florida (~115–120 stores at $15.99/4-pack), plus Hi Touch-distributed shelves at Whole Foods, Erewhon, and Lazy Acres across SoCal. Direct-to-consumer ships to 22 states. Won the [Prepared Foods Spirit of Innovation Award](https://www.preparedfoods.com/articles/129921-product-development-with-a-purpose-the-story-behind-magic-cactus) in the retail beverage category.

### Jeeter - Quad-Infused Pre-Rolls

Infused pre-rolls are the [fastest-growing pre-roll sub-category nationally](https://blunttalkzz.com/articles/the-20-most-popular-pre-rolls-in-new-jersey-2025-flavor-potency-fan-favorites) - up 139.7% YoY in New Jersey, now 60% of California's pre-roll market versus 7% in newer states. Jeeter sits at the apex. The Quad-Infused line launched simultaneously in Arizona, California, and Michigan in March 2025 and expanded into New York that September.

The formula: premium flower + THCA (or liquid) diamonds + live rosin + terpenes + kief finish, hand-mixed, across 20+ strains. Jeeter is the [#1 pre-roll brand in California](https://daysavers.com/preroll-blog/top-prerolls/state-and-provinces/) ($99M, 13.9% share), Arizona ($45M, 23% share), Massachusetts, Michigan, and by March 2026, Missouri. When every pre-roll maker is chasing the infused tier, the market leader raising the ceiling is the story worth tracking.

### Trail Magic - Hemp-THC Iced Tea Lemonades

Trail Magic has a clear occasion and sticks to it: the outdoors. Four half-and-half iced tea/lemonade flavors, two sparkling SKUs, available in 3mg, 5mg, and 10mg Delta-9 tiers. The brand is from the team behind Minneapolis Cider Company - and [Trail Magic has already surpassed cider sales](https://tcbmag.com/tcb-100-people/david-oneill-jason-dayton-and-rob-fisk/) at MCC.

The Half & Half Classic won [Best Infused Ready-to-Drink at the 2024 High Spirits Awards](https://www.startribune.com/minnesota-cannabis-beverage-company-wins-national-recognition/600356443). Retail now includes the MCC taproom (the largest cider taproom in the U.S.), hundreds of Minnesota outlets, Total Wine, and 11 Target stores as part of the October 2025 MN pilot. The monthly Trail Magic Hiking Club activation is the clearest community-building play any cannabis beverage brand has executed.

### Jaunty - Liquid Diamonds 1.5g AIO

Launched in late March 2026, Jaunty's Liquid Diamonds 1.5g all-in-one is the most recent drop on this list and arguably the most technically interesting. It pairs High Terpene Extract (15–40% terpenes, industry standard) with True Terpenes' proprietary Headstash™ technology, which restores the ultra-light thiols, esters, and aldehydes that typically off-gas and disappear during extraction. Jaunty brands the combined output as "Living Spectrum."

Five launch SKUs - Apples & Bananas, Magic Melon, Pineapple Whip, Ruby Red Diesel, plus a 4/20 "Waldos Super Boof" collab with the creators of the term "420." Jaunty was [New York's top-selling cannabis vape brand](https://honeysucklemag.com/jaunty-from-hempire-to-empire-new-york-cannabis/) coming into 2025 and distributes to effectively every licensed dispensary in NY's 260+ store network.

### Wynk - THC+CBD Balanced Microdose Seltzer

The product lineup spans 2.5mg, 5mg, and a 10mg Lemonade Seltzer line that launched April 2025 - all THC+CBD balanced, 0 calories, 0 sugar, 0 alcohol. The balanced ratio is the formulation hook; the founder background is the operator-narrative hook.

Co-founder Angus Rittenburg is a [former Tesla mechanical design engineer](https://www.businessinsider.com/what-learned-working-tesla-helped-me-start-business-2025-11) (Model 3 battery architecture, 2015–2017) who brought a manufacturing-discipline playbook to a category still learning how to scale CPG. Wynk is the only beverage brand on this list landing in *both* Target's Minnesota pilot and Sprouts' Texas/Florida rollout.

### Sublime (Feel Sublime) - Savory Craft Edibles

The edible category is overwhelmingly sweet. Sublime is building in the savory white space. Spicy Southwest Pretzels (sourdough pretzel nuggets, jalapeño-ranch seasoning, blue agave syrup; 100mg THC per bag, 10mg per serving) is the flagship. Lemon Tea Cake Bites reformulated from 50mg legacy medical cakes to 10mg recreational bites. The catalog extends into Chili Limon Popcorn, a salted pretzel milk chocolate bar, and Kona sea salt caramel chews.

Operating across Arizona, New Mexico, and Oregon as a craft producer, Sublime is the clearest example on this list of a brand betting that format and flavor innovation - not dose escalation - is where edibles go next.

### The Pattern

Three themes tie this list together:

1. **Formulation has matured:** multi-cannabinoid stacks tied to named effects, HTE + proprietary terpene tech, effects-first dose architectures.
2. **Retail channels are evolving:** Target, Sprouts, Whole Foods, and Erewhon are now viable distribution surfaces for hemp-derived products, with implications that will ripple back into THC retail.
3. **Format innovation is beating novelty:** the brands winning in 2026 are refining economics and execution on categories the industry has spent years defining - pre-rolls, tablets, seltzers, savory edibles - not inventing something that has no precedent.

For operators thinking about which brands to stock, partner with, or benchmark against in 2026, this is the cohort worth knowing.

---

# Why Cannabis AR Metrics Matter More Than Your Monthly Revenue

URL: https://www.tryheadquarters.com/blog/why-cannabis-ar-metrics-matter-more-than-your-monthly-revenue
Published: 2026-04-13
Summary: Cannabis wholesale brands are paying federal taxes on revenue they haven't collected.

Cannabis wholesale brands are paying federal taxes on revenue they haven't collected. This single sentence explains why more than 4,000 licensees surrendered their permits in the 18 months leading up to 2026, and why an industry generating roughly $30 billion in revenue last year is simultaneously carrying an estimated $2.24 billion in unpaid receivables.

Under Section 280E, cannabis businesses owe federal tax on gross profit - accrued, not collected - at effective rates between 40% and 70%. Meanwhile, the industry's average invoice sits 300 days past due, more than triple the B2B benchmark of 90. A brand that ships $500K of product on Net 30 in Q4 books the revenue, accrues the tax liability, and then waits ten months to see the cash. The IRS does not wait ten months. That gap is where operators die.

## DSO Is the Leading Indicator of Solvency

Monthly revenue is a lagging vanity metric in cannabis wholesale. Days Sales Outstanding is the leading indicator of whether the business survives the next tax quarter. DSO tells a CFO exactly how much recognized revenue has not yet converted into usable cash - which is the figure that determines whether 280E payments can be funded without emergency borrowing.

The benchmarks operators should be tracking against:

| Channel | Target DSO | Concern | Crisis |
|---|---|---|---|
| Wholesale (Net 30) | 30–40 days | >55 days | >75 days |
| Wholesale (Net 60) | 60–75 days | >90 days | >120 days |
| Distributor to Brand | 35–50 days | >65 days | >90 days |

An $8M brand sitting at 73 days DSO - roughly where most cannabis wholesalers actually live - has $1.6M of working capital permanently frozen in receivables that should be cycling back every 30. At the cannabis industry's 8–12% cost of capital, that's $128K–$192K of pure opportunity cost every year. It does not show up on the P&L. It just quietly reduces the true return on every dollar the brand invests.

Then the quarterly 280E payment arrives on revenue shipped the prior quarter but not yet collected. That is the death spiral, and it is the single most common failure mode of the post-2021 cannabis correction.

## The Collection Curve Is Unforgiving

Once an invoice passes 90 days, recovery probability drops below 50%. At 180 days, it's 20–40%. After two years, under 10%. A $100,000 receivable at 30 days past due is worth about $80,000 in expected recovery. The same receivable at 180 days is worth $20,000. Waiting a quarter to chase a delinquent account isn't a back-office oversight - it's a material destruction of enterprise value.

The highest-leverage intervention is not collections. It's pre-credit due diligence. CannaBiz Credit Association data shows companies running even basic credit checks are 60% less likely to end up in collections. Most cannabis brands still extend terms on relationships and reputation. That is subsidizing the worst customers with working capital stripped from the best ones.

## Three Metrics Wholesale CFOs Should Be Reviewing Weekly

**DSO**, segmented by customer type, geography, and product category. Aggregate DSO hides the single-account concentration that kills brands.

**Collection Effectiveness Index (CEI)** - how much of the collectable AR was actually collected in the period. Above 80% is functional; below 75% signals a process, staffing, or policy failure. CEI isolates collections performance from sales volatility in a way DSO cannot, which is why it's the better diagnostic when sales teams turn over and new reps stop enforcing terms.

**Cash Conversion Cycle**, integrating DSO with inventory days and payable days. One operator that tightened CCC from 73 days to 48 freed $120,000 in working capital without raising a dollar of new capital - internally generated liquidity in an industry where external financing is scarce and expensive.

## Where Does Your Brand Actually Sit?

Most cannabis wholesale brands can be placed on one of four rungs. Finding your level is the first honest step toward fixing the cash problem.

**Level 1 - Reactive.** No formal [aging report](/ar-relay). Collections happen when someone remembers. DSO unknown. 280E reserve calculated once a year at filing time. This is where the majority of small- and mid-size brands actually sit, and where most of those 4,000+ license surrenders originated.

**Level 2 - Aware.** Monthly aging report. Documented terms. Quarterly DSO. Monthly 280E reserve. Collections outreach begins at 60+ days past due - which is already on the wrong side of the recovery curve.

**Level 3 - Proactive.** Weekly aging reviewed by the CFO. Tiered credit policy: Tier A Net 30 for chains with 12+ months clean history, Tier B Net 15 for newer accounts, Tier C COD for anything unverified or previously delinquent. Mandatory credit checks before terms are extended. Structured collections escalation starting at Day 20 (ten days before due). A 13-week cash flow forecast built on probability-weighted collections, not flat assumptions. 280E reserves adjusted weekly. This is the level where brands stop reacting to cash crises and start preventing them.

**Level 4 - Strategic.** Real-time AR dashboard integrated with ERP and POS. CCC benchmarked quarterly. Sales compensation tied to collected cash rather than booked revenue - typically 20–30% of commission held until payment receipt, with bad-debt charge-back on write-offs within twelve months of origination. AR quality actively marketed to lenders as a competitive advantage during refinancing conversations.

The gap between Level 1 and Level 3 can be closed in 90 days with dedicated focus. The cash flow improvement from that transition will typically exceed any marketing or sales initiative the brand could undertake in the same window - and it is funded entirely by cash that already exists on the balance sheet, trapped inside aging invoices.

Revenue is what a brand has theoretically created. DSO tells you how much of it will actually exist when the 280E bill comes due. In a cannabis wholesale environment, the second number is the only one that matters.

Common questions:

Q: What DSO should a cannabis wholesale brand target?
A: On Net 30 wholesale terms, 30 to 40 days is healthy, above 55 days is a concern, and above 75 days is a crisis. Most cannabis wholesalers actually operate near 73 days, which leaves roughly a full quarter of revenue frozen in receivables that should be cycling every 30 days.

Q: How much does a day of DSO actually cost?
A: An $8M brand at 73 days DSO has about $1.6M of working capital permanently trapped in receivables. At the industry cost of capital of 8 to 12%, that is $128K to $192K of opportunity cost every year, and it never appears anywhere on the P&L.

Q: Why is DSO more important than monthly revenue in cannabis?
A: Section 280E taxes gross profit when revenue is booked rather than collected. Revenue tells you what the brand theoretically created; DSO tells you how much of it will exist as cash when the tax payment comes due. Only the second number determines solvency.

---

# Fragmented Systems, Phantom Receivables: The Data Problem Behind Cannabis AR Aging

URL: https://www.tryheadquarters.com/blog/fragmented-systems-phantom-receivables-the-data-problem-behind-cannabis-ar-aging
Published: 2026-03-30
Summary: Most cannabis brands don't have a collections problem. They have a data problem that makes collections impossible to manage.

Most cannabis brands don't have a collections problem. They have a data problem that makes collections impossible to manage.

Industry-wide delinquent payments have crossed $3.8 billion nationally, with projections pushing toward $4.2 billion. Those numbers are alarming, but they obscure a more fundamental issue. Before a brand can collect on overdue invoices, it needs to know which invoices are actually overdue, by how much, and from whom. For a surprising number of cannabis wholesale operations, the aging report that's supposed to answer those questions is structurally wrong before anyone opens it.

The root cause isn't negligence. It's architecture. Cannabis brands operate across a stack of disconnected systems that were never designed to produce a unified view of receivables. The gaps between those systems generate phantom balances, misallocated payments, and aging buckets that don't reflect economic reality.

## The Four-System Problem

A typical cannabis brand runs at least four systems that touch AR data: a state-mandated seed-to-sale platform (Metrc, BioTrack), a B2B wholesale marketplace (LeafLink, Distru, Apex Trading), an accounting system (usually QuickBooks Online or Xero), and one or more spreadsheets handling the reconciliation that none of these platforms do natively.

Each system has its own data schema, its own transaction identifiers, and its own timing conventions. An order placed on LeafLink generates one record. The shipment logged in Metrc generates another. The invoice created in QuickBooks generates a third. And the payment - if it arrives - may not reference any of those identifiers clearly enough to close the loop automatically.

The result is that the official [AR aging](/ar-relay) report, which lives in the accounting system, is only as accurate as the manual work that connects it to order, shipment, and payment data from the other three platforms. When that manual work falls behind - and it routinely does - invoices sit in the wrong aging bucket, payments go unmatched, and the report becomes a lagging indicator of what someone last had time to reconcile rather than a real-time picture of exposure.

## Cash Makes Everything Worse

In most wholesale industries, electronic payments create a clean audit trail: payment hits the bank, remittance data ties it to an invoice, the AR subledger updates. Cannabis doesn't get that luxury. Federal banking restrictions mean a significant share of wholesale transactions still settle in cash or through workaround payment channels that strip out invoice-level detail.

When a dispensary drops a lump cash payment covering three invoices - or pays 80% of one invoice and 60% of another in a single deposit - the accounting team faces a matching problem that no system in the stack solves automatically. The most common workaround: apply the payment against the oldest open invoices and move on. This clears the aging report cosmetically but misallocates the cash economically. The invoices that were actually paid may still show as open. The ones that weren't may appear current.

Cross-industry data on cash application shows that unapplied or misapplied payments are one of the primary drivers of aging report distortion even in industries with full banking access. In cannabis, where cash volume is higher and remittance data is thinner, the distortion compounds. A brand running $500K in monthly wholesale credit sales with even 10% misapplied cash is carrying $50K in phantom receivables that inflate aging buckets and distort DSO calculations every single month.

## Invoice Disputes That Never Close

Incomplete or inaccurate invoicing is a known pain point in cannabis wholesale. Missing license numbers, mismatched pricing from promotional agreements, incorrect quantities against what Metrc shows as transferred - these discrepancies trigger disputes that stall payment. That's a collections problem. But it's also an aging-report problem, because disputed invoices keep aging even when the balance isn't genuinely delinquent.

Without a disciplined process for flagging disputed invoices separately from truly overdue ones, the 60–90 day bucket becomes a mix of two fundamentally different categories: customers who won't pay and invoices that can't be paid until the brand fixes its own paperwork. Finance teams looking at a blended aging summary can't distinguish between credit risk and operational error - which means they can't prioritize correctly.

The data hygiene issue runs deeper than individual disputes. When customer master records aren't standardized across systems - "Green Leaf Dispensary" in QuickBooks, "Green Leaf LLC" in LeafLink, "GREENLEAF-001" in Metrc - even basic aggregation by customer becomes unreliable. Concentration risk hides behind inconsistent naming. A brand might not realize that its three largest aging balances all belong to the same retail chain operating under different entity names in different systems.

## The Spreadsheet Tax

The natural response to all of this fragmentation is spreadsheets. Export the aging from QuickBooks, pull order data from the marketplace, cross-reference against Metrc manifests, manually build the reconciled view. Most cannabis finance teams do some version of this weekly or monthly.

The problem isn't that spreadsheets are inherently bad. The problem is that they're inherently fragile, and in cannabis, the reconciliation workload is already heavy enough from compliance reporting that AR aging often gets deprioritized. When the spreadsheet reconciliation falls two or three weeks behind, the aging report that leadership reviews is a snapshot of what was true at the last reconciliation, not what's true now.

Manual processes also introduce errors that compound over time. A formula that doesn't account for a credit memo. A customer name that doesn't match across tabs. A payment that gets double-applied because two people touched the same file. Each of these is individually minor and collectively corrosive - and in cannabis, where the reconciliation workload already includes compliance reporting across Metrc and multiple sales channels, these errors accumulate faster than most teams can catch them.

## Why This Matters Beyond the Aging Report

Distorted AR aging isn't just an accounting nuisance. It cascades into decisions that cost real money.

**Bad-debt reserves get set wrong.** GAAP requires estimating allowance for doubtful accounts based on aging analysis. When the aging buckets are polluted with misapplied cash and unresolved disputes, the loss-rate assumptions applied to each bucket produce unreliable reserves - either understating risk (making the balance sheet look stronger than it is) or overstating it (depressing reported earnings unnecessarily).

**Financing gets harder.** Cannabis brands increasingly need AR-backed financing or payment-guarantee programs to manage working capital. Lenders and platforms evaluate the quality of receivables based on aging data, historical collection rates, and reconciliation discipline. A brand whose aging report doesn't tie cleanly to bank deposits and customer records will either pay a higher discount rate or get declined entirely.

**Credit decisions stay reactive.** The strategic value of an aging report is in driving credit policy: tightening terms on chronically late payers, expanding credit to reliable ones, cutting off accounts that cross defined thresholds. When the data is unreliable, these decisions get made on gut feel and sales-team advocacy rather than evidence. Brands keep shipping to accounts that should be on credit hold because nobody trusts the numbers enough to enforce the policy.

## Three Things That Actually Help

**Standardize customer master data across every system.** Legal entity name, license number, and a single internal customer ID should be consistent from marketplace to Metrc to QuickBooks. This is unglamorous work. It's also the single highest-leverage fix for aging accuracy, because it makes aggregation, concentration analysis, and payment matching reliable at the customer level.

**Separate disputed invoices from delinquent ones in reporting.** Whether through a custom field in QuickBooks, a status tag in the marketplace platform, or a column in the reconciliation spreadsheet - disputed invoices need to be visually and analytically separated from invoices that are simply unpaid. This one change makes the 60–90+ bucket dramatically more actionable.

**Reconcile weekly, not monthly.** Monthly reconciliation means the aging report is always stale by definition. A weekly cadence - even a lightweight one focused on matching payments received in the last seven days to open invoices - keeps the data fresh enough to drive real-time collections decisions rather than retrospective cleanup.

None of these require a platform migration or a six-figure software investment. They require process discipline and the recognition that an aging report built on fragmented, unreconciled data isn't a reporting tool - it's a liability.

---

# Why Cannabis Operators Can't Pay Their Bills on Time

URL: https://www.tryheadquarters.com/blog/why-cannabis-operators-cant-pay-their-bills-on-time
Published: 2026-03-19
Summary: When your customers don't pay you on time, you can't pay your vendors on time. In most industries, a revolving credit facility absorbs that timing gap. In cannabis, there is no credit facility.

When your customers don't pay you on time, you can't pay your vendors on time. In most industries, a revolving credit facility absorbs that timing gap. In cannabis, there is no credit facility. Consider an operator running $500K in monthly wholesale credit sales at a healthy DSO of 30 days. That's $500K in receivables outstanding at any given time - manageable, predictable, plannable.

Now let DSO drift to 60 days. The same sales volume, but $1 million is now locked in unpaid invoices. That additional $500K didn't come from a new investment or expansion. It's cash that customers are sitting on, and it has to come from somewhere. In practice, it comes from the AP stack: vendor payments get pushed, payroll gets tight, tax remittances slip.

The math is punishing because the leverage works in both directions. Each additional day of DSO locks up approximately 3.3% of monthly revenue in receivables. For operators already running at compressed margins - Green Thumb's gross margin dropped from 53.7% to 45.4% in Q4 2025, a pattern repeated across MSOs - there is no margin cushion to absorb the hit. AR slippage doesn't just strain cash flow. It breaks the operating model.

## Why Cannabis Has No Shock Absorber

In traditional CPG, a manufacturer dealing with slow-paying retailers can draw on a bank line, factor receivables through established programs, or access supply-chain finance at reasonable rates. Cannabis operators have almost none of these options.

Thirty to fifty percent of wholesale transactions are still cash-based because mainstream payment rails remain largely closed to the industry. Where ACH or wire transfers are available, they often route through specialized cannabis payment processors with longer settlement windows, higher fees, and more reconciliation friction. A payment that's "sent" on day 28 of net-30 terms might not actually hit the operator's account until day 35 or 40 once processing, compliance holds, and bank-side clearing play out.

Meanwhile, the industry faces approximately $3 billion in debt maturing by the end of 2026, with five major MSOs alone holding over $1.8 billion in upcoming obligations. Capital markets remain effectively closed for most operators. When external financing is scarce and expensive, the cash-conversion cycle becomes the entire financial strategy - and AR collections become the single most important variable in that cycle.

## The Feedback Loop That Vendors Feel First

When AP teams are forced into triage mode, vendors absorb the impact in a predictable sequence. Non-critical suppliers get stretched first. Then secondary vendors hit payment rotation - paid only when their product or service is immediately needed. Eventually, even strategic suppliers start seeing delays, shortened orders, or requests to restructure terms.

This cascades upstream. A brand that's paid late by retailers delays payments to cultivators and packaging suppliers. Those upstream vendors face their own AP squeezes, affecting labor, inputs, and facility costs. The entire value chain decelerates - not because demand disappeared, but because cash is trapped in aging receivables at one node.

The concentration dynamics in cannabis amplify this. Regulatory barriers to interstate commerce mean a supplier can't simply redirect inventory from a slow-paying California retailer to a faster-paying account in Michigan. Licensing, compliance, and distribution constraints lock operators into geographic dependencies. When a major buyer stretches terms, the supplier's options are limited: absorb the delay, cut the customer off and lose the volume, or pass the pain to their own vendors.

## Which Operator Are You?

Operators tend to fall into one of four postures on the AR-to-AP spectrum, and being honest about where you sit determines what to fix first.

**Strategists** run proactive credit policies, structured collections, and deliberate vendor segmentation. Their vendors get paid predictably. These operators treat cash conversion as a board-level metric.

- **Jugglers** sell aggressively on terms, collect reactively, and use whatever capital buffer they have to smooth the gaps. Vendors get paid - until the buffer runs out, at which point payment patterns become volatile fast.

- **Survivors** maintain tight AR controls but operate with minimal capital reserves. When collections are on track, everything works. One or two large accounts stretching terms can tip the entire AP schedule into crisis.

- **Reactors** have weak AR processes, thin capital, and default to cash firefighting. Vendors experience chronic late payments and eventually either tighten terms to prepay or walk away entirely.

Most operators who think they're Strategists are actually Jugglers or Survivors - and the distinction matters, because the failure mode is different. Jugglers blow up when external capital dries up. Survivors blow up when a single large customer decides to stretch from net-30 to net-60.

## Three Moves That Shift the Curve

This isn't a problem that requires an 18-month transformation to start addressing. Three moves compress the AR-to-AP cascade immediately.

- **Run a real aging analysis - segmented by customer, not just in aggregate.** Most operators track DSO as a single number. That average masks the distribution. You likely have a cluster of accounts paying on time and a tail of accounts rolling past 60 or 90 days that disproportionately consume both cash and collections bandwidth. Identify the tail. Quantify it. That's where the money is trapped.

- **Tie credit terms to payment behavior, not just relationship tenure.** A customer who's been buying for two years but has drifted from net-30 to net-55 over the last six months is a higher risk than a newer account paying on day 25. Segment your book by actual payment patterns and adjust terms accordingly - shorter windows, tighter limits, or prepay requirements for chronic stretchers.

- **Build a vendor-priority matrix before you're in triage.** Decide now - not during a cash crisis - which vendors are critical and irreplaceable versus commoditized and substitutable. When AR slippage forces payment trade-offs (and it will), the operators who've already mapped their vendor hierarchy make faster, less damaging decisions than those figuring it out under pressure.

The cannabis industry projected just 4% MSO revenue growth in 2026. In a low-growth, margin-compressed environment, the operators who survive aren't necessarily the ones with the best products or the most locations. They're the ones who collect faster than they owe.

---

# QuickBooks for Cannabis: Multi-Entity Financial Consolidation

URL: https://www.tryheadquarters.com/blog/quickbooks-for-cannabis-multi-entity-financial-consolidation
Published: 2026-03-09
Summary: 9 out of 10 of cannabis companies run their books on QuickBooks, even though it has has zero native consolidated reporting.

9 out of 10 of cannabis companies run their books on QuickBooks. Most of those companies operate at least three legal entities across multiple states. QuickBooks Online has zero native consolidated reporting. That gap - between how cannabis businesses are structured and what their accounting platform actually does - is where controllers lose entire weeks every month to manual Excel exports, mismatched charts of accounts, and consolidation workbooks that break the moment someone miscodes a transaction.

Our finance team uses a QBO add-on called JustConsolidate to run [multi-entity consolidation](/fa-services) for cannabis clients, and it eliminates the spreadsheet dependency for a fraction of what enterprise platforms cost.

## The Consolidation Gap in QBO

Vertical integration across cultivation, manufacturing, distribution, and retail typically means separate licenses and often separate entities at each stage. Layer in 280E cost segregation strategy, non-plant-touching management companies for banking access, and liability isolation across verticals, and a mid-size MSO can easily hit 10-15 entities before they've expanded beyond two states.

Each of those entities lives in its own QBO file. There's no consolidated P&L, no combined balance sheet, no unified cash flow statement. The standard workaround is exporting trial balances from each entity into Excel and manually building consolidation workbooks - a process that takes half of all businesses six or more days per close cycle. For cannabis MSOs dealing with intercompany supply chains, state-specific COA variations, and 280E documentation requirements, month-end close stretches to 10-15 days versus 3-5 for a comparable traditional retail operation.

That's not a minor time sink. At loaded Finance Controller rates, it's tens of thousands of dollars annually spent on reconciliation labor rather than strategic finance work.

## How JustConsolidate Works

JustConsolidate sits on top of your existing QBO ecosystem. It connects your subsidiary entities and consolidates their financials into a designated parent company - all within QuickBooks. No CSV exports. No spreadsheet reconciliation. No separate reporting platform to learn.

The setup follows four stages:

**1. Connect your entities.** Create a new QBO company to serve as your consolidation parent (requires QBO Plus or Advanced for the Category field used in division tracking). Then connect each subsidiary through Intuit's OAuth - a few clicks per entity, no manual data entry. Subsidiaries can be on any QBO tier since JustConsolidate only reads their data. You can set ownership percentages if you need proportional consolidation rather than the default 100% equity method.

**2. Map your charts of accounts.** This is the most time-intensive step, but it's a one-time effort. JustConsolidate runs three rounds of auto-matching - exact match, then 80%+, then 50%+ similarity - and surfaces remaining unmapped accounts for manual alignment. For cannabis operators with state-specific COA variations across entities, this is where you standardize everything into a single parent structure. Bulk mapping and Excel import/export options speed up the process for larger entity counts.

**3. Run the consolidation.** Select a fiscal month, click "Run Workflow," and JustConsolidate extracts subsidiary balances and reformats them to your parent COA in trial balance format. You can process all subsidiaries simultaneously. Review the proposed journal entries, confirm, and post — the entries land in your parent QBO company with division tags identifying each subsidiary by name and Realm ID.

**4. Handle intercompany eliminations.** This is optional but critical for cannabis operators running vertically integrated supply chains where product moves from cultivation to manufacturing to distribution to retail across separate entities. Designate an elimination division, select the intercompany accounts, and JustConsolidate proposes balanced elimination entries based on current-period activity. The system flags imbalances automatically - if your proposed elimination doesn't balance, it means intercompany transactions aren't recorded consistently across subsidiaries, and you know exactly where to look.

## Why This Matters for Cannabis Specifically

Multi-entity consolidation isn't a nice-to-have in cannabis - it's a compliance and survival requirement. Three dynamics make it non-negotiable:

**Intercompany supply chain visibility.** When your cultivation entity sells to your manufacturing entity, which sells to your distribution entity, which supplies your retail locations, every link in that chain is an intercompany transaction that must be eliminated on consolidation. Miss an elimination and you're double-counting revenue. In an industry where the IRS already scrutinizes cannabis financials at rates far above other sectors, inflated consolidated revenue is an audit magnet.

**280E documentation integrity.** Proper COGS allocation under 280E requires entity-level precision. A consolidated view that traces cost flows across verticals, with clean elimination entries and documented intercompany pricing, gives your CPA defensible workpapers rather than a spreadsheet that took 12 days to build and contains formula errors.

**Investor and lender reporting.** Capital providers need consolidated financials. Delivering them two weeks after month-end from a fragile Excel workbook signals operational immaturity. Delivering them from your accounting system, with clear subsidiary breakdowns and automated eliminations, signals a finance function that scales.

## The Cost Equation

JustConsolidate runs $15/month base plus $5/month per connected entity. A five-entity cannabis operation pays $40/month. A ten-entity MSO pays $65/month.

Compare that to the alternatives: Sage Intacct and NetSuite start north of $500/month with implementation costs measured in five and six figures. For operators already embedded in the QBO ecosystem who aren't ready for (or don't need) an enterprise ERP migration, JustConsolidate delivers 80% of the consolidation value at less than 10% of the cost.

## Getting Started

If you're running multiple cannabis entities on QuickBooks and still consolidating in spreadsheets, JustConsolidate is available in the [QuickBooks App Store](https://quickbooks.intuit.com/app/apps/appdetails/justconsolidate/en-us/).

Our finance team at HQ has implemented this for multi-entity cannabis clients and can help with the initial COA mapping, consolidation configuration, and intercompany elimination setup - the upfront work that determines whether the tool actually saves you time or just adds another system to manage.

Common questions:

Q: Does QuickBooks Online support multi-entity consolidation?
A: Not natively. QBO provides no consolidated P&L, combined balance sheet, or unified cash flow across companies, and the Company Switcher offers no intercompany elimination. Operators either build Excel consolidation workbooks from exported trial balances or add a purpose-built consolidation layer on top of existing QBO files.

Q: How long does cannabis month-end close actually take?
A: Cannabis MSOs commonly run 10 to 15 days versus 3 to 5 for comparable traditional retail, and half of businesses spend six or more days on the consolidation step alone. The gap comes from intercompany supply chains, state-specific chart of accounts variation, and 280E documentation requirements.

Q: Why do intercompany eliminations matter so much in cannabis?
A: Vertically integrated operators move product from cultivation to manufacturing to distribution to retail across separate entities, and every link is an intercompany transaction requiring elimination. Missing one double-counts revenue, and inflated consolidated revenue is an audit magnet in an industry the IRS already scrutinizes heavily.

---

# AlpineIQ vs. Klaviyo for Dispensary Email Marketing

URL: https://www.tryheadquarters.com/blog/alpineiq-vs-klaviyo-for-dispensary-email-marketing
Published: 2026-02-28
Summary: In a market where paid advertising tools are highly restricted, email is the highest-leverage owned channel a retailer has.

In a market where paid advertising tools are highly restricted, email is the highest-leverage owned channel a retailer has - and the gap between a purpose-built ESP and a bolted-on email feature compounds every single week.

## Core Distinction Operators Miss

AlpineIQ is a cannabis loyalty platform that happens to include email. Klaviyo is an ecommerce-native ESP that happens to be cannabis-friendly. That difference sounds semantic until you try to build a winback flow with conditional splits based on purchase frequency, product category, and days since last order - and realize one platform was engineered for exactly that workflow while the other is still catching up.

Alpine launched AIQ Flows in January 2026 - event-driven automation with conditional splits and AI-powered logic. That's a significant step forward. But Klaviyo has been refining its visual flow builder for over a decade, with tens of thousands of ecommerce brands stress-testing every edge case. The distance between "we now support conditional splits" and "here are 15 pre-built flow templates with predictive branching, A/B testing at every node, and revenue attribution down to the individual message" is measured in years, not updates.

Klaviyo closed fiscal year 2025 with $1.234 billion in annual revenue (32% year-over-year growth), serves 193,000+ paying customers, and posted $350 million in Q4 alone. That scale funds continuous product development around flows, segmentation, predictive analytics, and deliverability - the exact capabilities that determine whether email is a profit center or a checkbox.

## Plug-and-Play Trap

AlpineIQ's appeal is obvious: one platform for loyalty, compliance, POS sync, and marketing. For a single-location operator getting started, that simplicity is genuinely attractive. But convenience has a ceiling.

The operators who scale past three locations and $2M+ in annual revenue hit AlpineIQ's walls fast. The email builder is slower than any standalone ESP. The automation logic - even with Flows - lacks the depth required for sophisticated lifecycle programs. The template system doesn't support hybrid HTML editing, CLI-based workflows, or the kind of design system consistency that multi-location brands need. And you're locked into one vendor's roadmap for every function, which means if their email execution lags (it does), your entire marketing stack suffers.

Klaviyo's architecture is the opposite: best-in-class email that integrates with everything else. The Klaviyo CLI lets technical teams manage campaigns, flows, and templates as version-controlled local files. The Flows API (currently in pilot) opens programmatic automation management. Built-in AI tools assist with subject lines, content generation, and send-time optimization. These aren't future promises - they're shipping product.

## Deliverability

AlpineIQ does not operate its own email infrastructure. Under the hood, AIQ is a reseller built on SendGrid (Twilio). Your dispensary's emails are sent through SendGrid's shared IP pools alongside every other cannabis retailer senders on that infrastructure. Dedicated IPs are technically available through SendGrid's Pro tier, but AIQ adds an abstraction layer between you and that infrastructure. When deliverability problems surface, you're troubleshooting through a reseller who's troubleshooting through SendGrid. That's two degrees of separation from the actual sending layer.

Klaviyo runs proprietary email infrastructure built on AWS. They own and manage the entire sending layer - their own MTAs, their own IP pools, their own deliverability operations team. Klaviyo maintains direct relationships with Gmail and Microsoft/Outlook. The platform handles native domain warming over 30-40 days, ISP feedback loops, automated bounce handling, and suppression logic in-house. Dedicated IPs are recommended at 1M+ emails/month and managed directly by Klaviyo's team. Their centralized Deliverability Hub gives operators real-time visibility into inbox placement by provider, domain health diagnostics, and actionable fixes.

For an industry where email is often the only legal marketing channel, the difference between owning your sending infrastructure and renting shared pipes is existential.

## When to Run Both

The smartest dispensary operators we work with aren't necessarily choosing one or the other - they're running both strategically.

AlpineIQ earns its place for three specific use cases:
- SMS: Klaviyo doesn't currently allow SMS marketing for dispensaries, and AIQ handles this natively through its POS integrations.
- Reputation management: AIQ serves as an alternative sending platform for big blasts to older lists or segments with questionable deliverability history - keeping those sends off your Klaviyo domain so your primary sender reputation stays pristine.
- Multi-POS environments: If you're a dispensary running Treez in some locations and Dutchie in others, AIQ's plug & play POS integrations can unify that data more easily than managing buildouts of custom Klaviyo integrations per system.

## Where This Goes

The trajectory matters as much as the current state. Klaviyo is investing in CLI tooling, API-first automation management, and already has a Marketing AI Agent built into the platform. In three years, the most sophisticated dispensary operators will be running Klaviyo with AI agents directing creative strategy, segmentation decisions, and send-time optimization at a level that manual execution can't match.

For email, it's Klaviyo. Build the stack accordingly.

---

# Why QuickBooks Online Keeps Failing Cannabis Controllers (And What To Do About It)

URL: https://www.tryheadquarters.com/blog/why-quickbooks-online-keeps-failing-cannabis-controllers-and-what-to-do-about-it
Published: 2026-02-25
Summary: Cannabis controllers running multi-entity operations on QBO are burning 60 hours/month on manual consolidation work.

Cannabis controllers running multi-entity operations on QuickBooks Online are burning 40 to 60 hours a month on manual consolidation work that a purpose-built system would eliminate. That's not a minor inefficiency. At a loaded controller cost of $85 to $120 per hour, the reconciliation labor alone represents $40,800 to $86,400 annually - before accounting for the errors it produces.

The math gets worse from there. When you add audit exposure, 280E misallocation risk, and the three-system reconciliation trap most operators are stuck in, a six-entity cannabis operation on QBO faces roughly $640,900 in total annual cost attributable to platform inadequacy. For an industry where 280E already drives effective federal tax rates to 70-90% of gross profit, that's capital being incinerated on workarounds rather than deployed toward growth.

## The Architecture Problem

QuickBooks Online was built for single-entity small businesses processing a few dozen transactions per day. Cannabis operations are the opposite of that. Forty-three states require vertical integration with separate legal entities for cultivation, manufacturing, distribution, and retail. Each entity needs its own QBO file. Each file is a silo.

QBO's Company Switcher feature - the tool Intuit offers for multi-entity management - was designed for a freelancer toggling between an LLC and a side project. It provides zero intercompany elimination, zero automated reconciliation across entities, and no native consolidated reporting. QBO does offer a workaround: a third-party app called JustConsolidate and a Spreadsheet Sync feature that pipes financial data into Google Sheets for manual consolidation. But neither lives inside QBO itself. Getting them configured requires meaningful technical know-how, the output lands in a spreadsheet rather than your accounting system, and the workflow is clunky enough that most controllers without a finance-systems background will struggle to maintain it. Controllers still end up exporting CSVs from four or five QBO instances, manually mapping chart of accounts discrepancies, and building consolidation workbooks that break every time someone miscodes a transaction.

The platform also degrades under volume. At 200-plus daily transactions - standard for a mid-size dispensary - QBO's performance starts to stall. Reporting lags. Bank feeds disconnect. The 25-user cap forces operators to rotate access credentials, creating audit trail gaps that regulators will eventually find.

To be fair, scaling on QBO is technically possible. The platform does expose APIs, and operators with serious technical chops can build custom integrations that push QuickBooks beyond its native capabilities - automating intercompany entries, syncing inventory across entities, even wiring up real-time reporting dashboards. But "technically possible" and "operationally practical" are different conversations. You need developers who understand both the QuickBooks API surface and cannabis accounting specifics, and that intersection is vanishingly small. Most controllers are not in a position to architect and maintain custom middleware alongside their actual job.

The AI angle makes this more interesting - and more complicated. With the rise of vibe coding and increasingly capable AI development tools, a growing number of savvier operators are bootstrapping their own solutions on top of QuickBooks APIs. The appeal is obvious: skip the six-figure ERP migration and build exactly what you need for a fraction of the cost. Some of these homegrown solutions are genuinely impressive. But the shelf life is the problem. Each new model release and capability increase tends to obsolete the tooling that came before it, meaning the integration you spent three months building in Q1 may need to be substantially rearchitected by Q3. Whether that time investment pencils out against just migrating to a purpose-built platform remains an open question.

## 280E: Where QuickBooks Becomes a Liability

Section 280E is unforgiving. Cannabis businesses can only deduct cost of goods sold - every other ordinary business expense is nondeductible at the federal level. Proper COGS allocation requires granular cost segregation: direct labor, materials, and overhead tied to production versus everything else.

QuickBooks has no native 280E support. No automated cost segregation. No dual-reporting framework that separates allowable COGS from disallowed expenses. Controllers are left building manual workarounds - shadow ledgers, custom fields repurposed beyond their design intent, and spreadsheets that sit outside the accounting system entirely.

The consequences are measurable. Operators relying on QBO for 280E compliance routinely face $150,000 to $600,000 in IRS disallowances during examination. The IRS knows cannabis companies on generic accounting software are low-hanging fruit. Without defensible, system-generated cost allocation documentation, the audit defense comes down to a controller's spreadsheet against an examiner's methodology.

Even with Trump's December 2025 executive order directing rescheduling of marijuana from Schedule I to Schedule III - which would sunset 280E's applicability - the timeline remains uncertain. The DOJ finalization is expected in the first half of 2026, but cannabis remains Schedule I until the rule is published. Every quarter of continued 280E exposure without proper cost segregation is another quarter of audit risk that compounds.

## The Three-System Trap

Cannabis controllers don't just manage books. They reconcile three systems that were never designed to communicate: QBO for accounting, METRC or BioTrack for state seed-to-sale compliance, and a POS platform for retail transactions. Each system has its own data schema, transaction identifiers, and timing conventions.

That reconciliation consumes 15 to 25 hours per week of skilled labor. Inventory discrepancies between the POS and METRC can trigger compliance holds. A mismatch between METRC and QBO can flag financial reporting irregularities. QuickBooks Pay explicitly prohibits marijuana-related transactions, which means even payment processing requires a separate workaround - typically a cannabis-specific payment processor that adds another reconciliation layer.

The compounding effect is strategic, not just operational. When the controller's week is consumed by data reconciliation, there is no bandwidth left for the work that actually matters: cash flow forecasting, margin analysis by product line, or building the financial models that investors and lenders require. Controllers become expensive data-entry operators instead of strategic financial leaders.

## What Operators Should Do Now

The migration trigger point is clear: 85% of cannabis operators running five or more entities on QBO migrate to a purpose-built platform within 18 months. Most wish they had moved sooner.

For operators not yet ready to migrate, three immediate actions reduce exposure. First, build a hyper-detailed chart of accounts with explicit 280E cost segregation - every account should be tagged as allowable COGS or disallowed expense with no ambiguity. Second, establish weekly reconciliation protocols across all three systems with documented exception handling, not monthly catch-up sessions. Third, engage a cannabis-specialist CPA to review your 280E methodology now, not during audit preparation.

For operators at the inflection point, purpose-built cannabis ERP platforms run $48,000 to $96,000 annually - a fraction of the hidden costs they replace. Native [multi-entity consolidation](/fa-services), real-time METRC integration, and automated 280E cost allocation eliminate the manual labor and reduce audit exposure simultaneously. Implementation runs eight to twelve weeks across five phases, with most operators achieving full ROI within three to six months.

The question isn't whether QuickBooks will fail your cannabis operation. It's how much that failure is costing you right now, and how long you're willing to keep paying it.

Common questions:

Q: At what point should a cannabis operator leave QuickBooks?
A: Five entities is the observed trigger. Roughly 85% of cannabis operators running five or more entities on QuickBooks Online migrate to a purpose-built platform within 18 months, and most report they should have moved sooner. Below three entities the migration rarely pays for itself.

Q: What does QuickBooks cost a cannabis operator in hidden labor?
A: Controllers spend 40 to 60 hours a month on manual consolidation. At a loaded rate of $85 to $120 per hour, the reconciliation labor alone runs $40,800 to $86,400 annually, before accounting for the errors it produces or the audit exposure those errors create.

Q: What is the three-system reconciliation trap?
A: Cannabis controllers reconcile three systems never designed to communicate: the accounting platform, the state seed-to-sale system, and a POS. Each carries its own schema, identifiers, and timing conventions, and the reconciliation consumes 15 to 25 hours per week of skilled labor that should be going to strategic finance work.

---

# Duplicate SKUs Are Quietly Killing Your Cannabis Margins

URL: https://www.tryheadquarters.com/blog/duplicate-skus-are-quietly-killing-your-cannabis-margins
Published: 2026-02-19
Summary: Somewhere in your catalog right now, the same product is probably living under two different SKU codes.

Somewhere in your catalog right now, the same product is probably living under two different SKU codes. Maybe it's "Gelato 41 3.5g" and "Gelato #41 1/8." Maybe it's a METRC package that got imported twice during a busy receiving shift. Maybe it's a budtender who created a new item on the fly because the right one wasn't showing up, and nobody ever cleaned it up afterward.

These aren't rare edge cases. They're a structural feature of how cannabis retail operates - and they're eroding margins in ways that rarely show up cleanly on a P&L.

---

## The Scale of the Problem

Retail industry research estimates that inventory distortion - driven substantially by duplicate and inaccurate SKU data - costs global retailers more than $1.77 trillion annually. Cannabis operators inherit every one of those problems and then layer on state-by-state track-and-trace requirements, high catalog churn, and limited access to capital. The result is that bad SKU data hits harder here than almost anywhere else in retail.

When even 3–7% of an active catalog consists of duplicate or near-duplicate products, realistic range for most operators, the downstream effects compound quickly:

- **100–300 basis points of margin leakage** from mispriced items, misallocated discounts, and vendor terms negotiated against inaccurate volume figures
- **10–25% excess working capital** locked in safety stock that planners over-buffer because demand signals are fragmented across duplicate identifiers
- **Elevated compliance risk** in markets like California, where audit discrepancy tolerances can run as low as 5%, and duplicate packages in METRC can push operators past that threshold without any physical product being missing

These aren't hypothetical risks. They're a predictable consequence of the environments most cannabis retailers operate in.

---

## How Cannabis Creates the Perfect Conditions for Duplicate SKUs

Three forces work together to make duplication nearly inevitable without active governance.

**Multi-system complexity.** Cannabis retailers typically maintain at least three parallel inventory views simultaneously: physical stock, track-and-trace (METRC or equivalent), and POS or e-commerce. Each has separate identifiers. When synchronization fails teams often resolve the discrepancy by creating a new record rather than mapping to an existing one. The most common version: a METRC package gets imported into POS twice, creating two products pointing to the same physical inventory.

**Strain naming chaos.** Unlike traditional CPG, cannabis has no standardized product naming convention. The same eighth can legitimately appear as "Gelato 41," "Gelato #41," "Gelato 3.5g," or "Gelato 3.5 gram" depending on who entered it and when. Each variation can generate a new SKU. When combined with batch-to-batch potency updates recorded as distinct products, it's common for a single physical product to accumulate several active identifiers over a few months.

**Rapid assortment turnover.** Cannabis markets move fast - new strains, limited drops, evolving form factors. Operators add SKUs frequently to keep menus current, but invest far less in end-of-life management. The long tail fills up with overlapping records, and because no single SKU looks obviously wrong, the duplicates survive.

---

## The Three Ways Margins Bleed

**1. COGS distortion.** Duplicate SKUs often carry different cost histories - different vendor prices, freight allocations, or promotional adjustments applied at different times. When sales for the same physical product scatter across multiple identifiers, margin analytics become unreliable. One copy of the SKU looks high-margin, the other looks like a drag. Pricing and buying decisions get made against the wrong numbers.

**2. Working capital inflation.** When demand for a product is split across two or three duplicate SKUs, each one appears more volatile and less predictable than it actually is. Planners respond rationally to that signal: they hold more safety stock. Multiply that across a catalog of hundreds or thousands of items, and the result is meaningful cash tied up in inventory that wouldn't be needed if the data were clean.

**3. Compliance exposure.** In METRC, the same physical batch can be represented as two distinct packages - a common side effect of incomplete receiving workflows or system conversions. Those duplicate packages cascade downstream into POS, then into reporting. When state auditors check, inventory appears to exist in two places simultaneously. Even with zero actual diversion, the operator faces the burden of demonstrating that - a costly and distracting process that clean data would have prevented entirely.

---

## What Clean SKU Data Actually Unlocks

The inverse is worth stating clearly. Operators who invest in SKU hygiene don't just eliminate losses - they gain a genuine analytical edge.

With consolidated, deduplicated product records, demand forecasting becomes meaningfully more accurate because historical sales reflect true velocity rather than fragmented signals. Category profitability becomes trustworthy, which makes vendor negotiations and assortment decisions easier to defend. Marketing attribution improves, because CRM and promotional programs are no longer crediting the wrong SKU for a sale. And compliance posture strengthens, because METRC records align with what's physically on the shelf.

Cross-industry data supports this. CPG benchmarks show that roughly 20% of SKUs in large portfolios are marginal contributors - duplicates or near-duplicates that add complexity without adding revenue. Companies that have rationalized their catalogs consistently report improved forecasting accuracy and lower carrying costs, without meaningful revenue loss.

---

## A Practical Starting Point

Fixing this doesn't require a multi-year transformation. Most operators can get meaningful signal in a few weeks by pulling a unified SKU extract from POS, METRC, and any active e-commerce or marketplace platforms, then running basic fuzzy-matching logic against brand, strain, package size, and potency fields. The clusters that emerge - groups of records that represent the same product under different identifiers - typically reveal both the scope of the problem and where the greatest financial impact is concentrated.

From there, the path is straightforward: designate a single canonical record for each cluster, clean up the regulatory package records, archive the duplicates, and establish a centralized item creation workflow so new duplicates don't re-enter the catalog.

The cannabis industry is young enough that most operators are still defining their core data architecture. Getting SKU governance right now - before catalogs grow another order of magnitude - is significantly easier than cleaning it up later. And in a margin environment this tight, the cost of waiting is real.

Common questions:

Q: How much do duplicate SKUs cost a cannabis retailer?
A: When 3 to 7% of an active catalog is duplicate or near-duplicate, the effects run to 100 to 300 basis points of margin leakage from mispricing and misallocated discounts, plus 10 to 25% excess working capital locked in safety stock that planners over-buffer because demand signals are fragmented.

Q: Why do duplicate SKUs form so easily in cannabis?
A: Three forces compound: operators maintain at least three parallel inventory views with separate identifiers, cannabis has no standardized naming convention so the same eighth appears under several spellings, and rapid assortment turnover adds SKUs far faster than any end-of-life process retires them.

Q: Can duplicate SKUs create compliance problems?
A: Yes, and without any physical product going missing. In markets where audit discrepancy tolerances run as low as 5%, duplicate packages in the traceability system can push an operator past threshold on their own. The building is correct and the system is wrong, and the system is what gets audited.

---

# Net Terms vs. COD: Managing Credit Risk for Cannabis Sales

URL: https://www.tryheadquarters.com/blog/net-terms-vs.-cod-managing-credit-risk-for-cannabis-sales
Published: 2026-02-05
Summary: More than $4 billion in outstanding receivables now circulates through the cannabis supply chain, with delinquencies surging as wholesale prices drop.

More than $4 billion in outstanding receivables now circulates through the cannabis supply chain, with delinquencies surging as wholesale prices drop. For brands extending credit to retailers, the stakes are existential: each dollar trapped in AR is working capital you can't use to fund production, pay suppliers, or survive the next pricing shock.

The decision between cash-on-delivery and net terms isn't a back-office policy choice. It's a strategic positioning decision that determines whether your brand builds market share or bleeds cash into uncollectible invoices.

## The Math Is Punishing

A brand running $500,000 in monthly credit sales on Net 30 terms carries approximately $575,000-$625,000 in receivables at any given time -accounting for typical several week payment delays beyond stated terms. If DSO drifts from 30 to 60 days, you've got an additional $500,000 trapped in unpaid invoices. That's half a million dollars you can't deploy.

Best-in-class distribution operations maintain DSO of 40-50 days with bad debt under 0.5% of sales. Most cannabis operators aren't hitting those benchmarks. And unlike traditional industries, Section 280E prevents you from deducting bad debt as an operating expense -you can only work around it through returns and allowances, requiring meticulous documentation that most brands lack.

## When COD Makes Strategic Sense

COD eliminates credit exposure entirely: zero aging reports, zero collection calls, zero write-offs. During extreme market volatility, COD operators avoid the cascading defaults plaguing credit-based competitors.

Use COD or short terms when:

- **New customer onboarding.** Start every relationship with COD or Net 15 with a deposit. Trust is earned through payment performance, not promises.
- **High-risk customers.** Any retailer showing deteriorating payment trends - average days to pay increasing, on-time percentage declining - should move to COD immediately.
- **Market volatility.** In mature markets like California, Oregon, and Colorado where oversupply has crushed margins, conservative terms are survival strategy.
- **Small transactions.** If credit administration costs exceed your profit margin on an order, COD simplifies everything.

The tradeoff is real: businesses offering net terms capture sales from cash-constrained customers that COD operators lose. In crowded markets where multiple brands compete for limited retail shelf space, credit terms often determine supplier selection.

## The Risk-Based Tiering Framework

Leading brands don't apply universal credit policies. They tier customers by creditworthiness and adjust terms accordingly.

**Tier 1 (Lowest Risk):** Established retailers with 95%+ on-time payment history, strong financials, and consistent order volume. Offer Net 30-45 with credit limits up to 15-20% of their net worth. These customers earn flexibility through demonstrated performance.

**Tier 2 (Moderate Risk):** Good payment history but thinner margins or moderate leverage. Net 30 with conservative limits (10% of net worth). Quarterly financial reviews.

**Tier 3 (Elevated Risk):** Variable payment patterns, declining financials, or operating in distressed markets. Net 15 or COD with deposits. Weekly monitoring of payment status. Move to COD at first missed payment.

**Tier 4 (High Risk):** Poor payment history, weak financials, small irregular orders. COD only. These accounts consume disproportionate administrative resources relative to revenue. Consider whether the relationship is worth maintaining.

The graduation strategy matters: start restrictive, then expand terms as trust builds. New customers begin at COD or Net 15 with deposits. Months 1-3, graduate to Net 15 with a $5,000 limit if paid on time. Months 4-6, move to Net 30 with a $15,000 limit. Beyond month 7, expand based on performance.

## Quantifying the Credit Decision

Run expected value analysis on every significant credit extension:

A $50,000 order with 20% margin generates $10,000 profit under COD -100% probability of payment, $10,000 expected value.

That same order on Net 30 to a creditworthy customer (98% payment probability) looks different: $10,000 profit × 98% probability = $9,800, minus 2% bad debt risk ($1,000 expected loss), minus financing costs (~$40 for 30 days). Expected value: approximately $8,760.

The 12% expected value reduction from credit extension must be weighed against incremental sales volume. If offering terms increases your sales by more than 12%, net terms create superior outcomes despite credit risk. If not, you're subsidizing sales with your working capital.

## Three Actions to Implement This Week

**Audit your current [AR aging](/ar-relay).** Calculate your actual DSO and compare it to your stated terms. If you're offering Net 30 but averaging 52 days to collect, you have a collections problem masquerading as a terms policy. Each additional day of DSO locks up approximately 3.3% of monthly revenue.

**Segment your customer base.** Rank every account by payment performance over the past 90 days. Any customer whose on-time percentage dropped more than 15 points or whose average days to pay increased more than 10 days requires immediate credit review. Move deteriorating accounts to shorter terms before they become write-offs.

**Document everything for 280E.** Since bad debt isn't deductible as an operating expense, structure write-offs as returns and allowances against gross receipts. This requires contemporaneous documentation - credit memos, customer correspondence, evidence of collection attempts. Build this discipline now, before you need it.

The $2.24 billion AR crisis isn't distributed evenly. Operators with systematic credit management, risk-based tiering, and proactive collections will capture market share from competitors bleeding cash into uncollectible receivables. The brands that survive the current pricing environment won't be the ones with the best products - they'll be the ones who get paid.

Common questions:

Q: When should a cannabis brand require COD instead of net terms?
A: Use COD for new customer onboarding, any retailer showing deteriorating payment trends, periods of extreme market volatility, and transactions small enough that credit administration costs exceed the profit margin. Start every new relationship at COD or Net 15 with a deposit and graduate on demonstrated performance.

Q: How do you decide whether extending credit is worth it?
A: Run expected value analysis. A $50,000 order at 20% margin yields $10,000 under COD. The same order on Net 30 to a creditworthy account yields roughly $8,760 after bad debt risk and financing cost. That 12% reduction pays only if offering terms lifts sales volume by more than 12%.

Q: Can cannabis operators deduct bad debt?
A: No. Section 280E prevents deducting bad debt as an operating expense. The only workaround runs through returns and allowances, which requires meticulous contemporaneous documentation that most brands do not maintain. That makes prevention through credit policy materially more valuable than recovery after the fact.

---

# New York's 90-Day Payment Rule: Adapting Your AR Strategy to OCM Regulations

URL: https://www.tryheadquarters.com/blog/new-york's-90-day-payment-rule-adapting-your-ar-strategy-to-ocm-regulations
Published: 2026-02-01
Summary: With industry-wide delinquent receivables now exceeding $4 billion - roughly 20% of revenue tied up in unpaid invoices - the margin for AR inefficiency has collapsed.

Nearly two years into New York's formalized credit framework, the operational reality is clear: cannabis operators who treat AR as a back-office function are bleeding cash. With industry-wide delinquent receivables now exceeding $4 billion - roughly 20% of revenue tied up in unpaid invoices - the margin for AR inefficiency has collapsed.

New York's 90-day payment structure created a defined ceiling on trade credit. Retailers purchasing on credit face a 30-day payment window before triggering COD restrictions. The framework didn't invent the AR problem, but it formalized the consequences - and two years of operation have surfaced what actually works for protecting cash flow.

## The Working Capital Squeeze

The math is punishing. Each additional day of DSO locks up approximately 3.3% of monthly revenue in receivables. A brand running $500K in monthly credit sales that lets DSO drift from 30 to 60 days has an extra $500K trapped in unpaid invoices - capital that could fund inventory, payroll, or expansion.

Industry benchmarks suggest 30-45 day DSO as the target range for cannabis operations. The sector's restricted banking access and thin margins leave no room for the 56-day median DSO common in traditional B2B. Yet many cannabis brands report effective collection cycles stretching well beyond 60 days, creating structural cash deficits that compound monthly.

The timing pressure intensifies as the industry approaches a debt reckoning. Approximately $3 billion in loans come due for major MSOs by the end of 2026 - Curaleaf, Cresco, Trulieve, Ayr, and Verano collectively face over $1.8 billion in maturities this year alone. Operators carrying bloated receivables into this environment face a double squeeze: capital locked in AR precisely when debt obligations demand liquidity.

## What Two Years Have Taught Operators

The New York market has functioned as a live laboratory for credit discipline. Operators who adapted early share common patterns.

**Credit terms tightened faster than required.** The 90-day maximum functions as a ceiling, not a target. Brands maintaining cash flow discipline default to net-30 or net-45 terms, reserving longer windows only for accounts with established payment histories. New accounts start at COD or net-15 until they demonstrate reliability.

**Collection cadence accelerated.** Waiting until day 60 to escalate a delinquent account wastes the window when intervention is most effective. Structured outreach starting at day 7 - friendly reminder, then firm follow-up at day 15, then escalation at day 30 - catches problems before they compound. The operators recovering cash fastest treat day 30 as the action threshold, not day 60 or 90.

**Sales compensation realigned.** Commission structures that pay on shipment rather than collection create misaligned incentives that inflate DSO. The workaround: holdback models paying 80% on shipment and 20% upon cash receipt, or tying quarterly bonuses to portfolio collection rates. Sales teams vet retailer creditworthiness more carefully when their comp depends on actual payment.

**Dispute resolution compressed.** Invoice disputes that drag for weeks destroy collection timelines. Contracts now commonly require written dispute notification within 3-5 business days; undisputed portions must be paid on schedule regardless. Finance teams building 48-hour dispute resolution capacity - investigating, issuing credits, or holding firm - prevent contested invoices from becoming aged receivables.

## The DSO Improvement Framework

Operators targeting DSO reduction focus on four levers.

**Invoice velocity.** The clock starts at delivery. Same-day invoicing with electronic delivery (not mailed paper) eliminates the 3-7 day lag that silently extends every collection cycle. Proof-of-delivery documentation ties the invoice date to an undisputable event.

**Payment friction reduction.** ACH and wire transfers clear faster than checks and create cleaner audit trails. Offering multiple electronic payment options and embedding payment links directly in invoice emails removes excuses. The brands with lowest DSO make paying easy.

**Credit segmentation.** Not every retailer warrants the same terms. Tiered credit limits based on payment history, order volume, and financial stability allow tighter terms for higher-risk accounts without losing lower-risk business. A simple framework: new retailers start at COD, graduate to net-15 after three on-time payments, then net-30 after six months of clean history.

**Visibility systems.** Real-time aging dashboards showing receivables by bucket (current, 1-30, 31-60, 61-90, 90+) and by account enable prioritized collection activity. Weekly AR reviews with defined escalation triggers - which accounts get calls this week, which get credit holds - turn collection from reactive firefighting into systematic cash recovery.

## Multi-State Implications

New York's framework remains the most formalized, but operators in other markets face similar pressures without the regulatory scaffolding.

New Jersey's Cannabis Regulatory Commission hasn't codified maximum credit terms - payment arrangements remain contract-driven. The absence of a state-mandated COD list means collections are entirely self-policed, which can mean either more flexibility or more exposure depending on internal discipline.

California's market continues grappling with AR dysfunction, though legislative proposals to mandate shorter payment windows (some as tight as 15 days on large invoices) signal regulatory appetite for tighter frameworks. Multi-state operators standardizing AR policies at conservative baselines - net-30 terms, structured collection cadences, credit tiering - find themselves better positioned regardless of which state frameworks tighten next.

## The Capital Efficiency Imperative

The strategic frame has shifted. Two years ago, tightening AR operations was about adapting to new rules. In 2026, it's about survival math.

Operators entering debt refinancing conversations with 60+ day DSO face harder terms and fewer options. Brands trying to fund expansion while 20% of revenue sits in aged receivables compete at a structural disadvantage against leaner competitors. And in a market where illicit competition continues pressuring margins, every dollar trapped in unpaid invoices is a dollar unavailable for the pricing, marketing, or operational investments that drive market share.

The operators treating AR as a strategic function - not a back-office afterthought - are converting receivables to cash faster, funding growth internally, and building the financial credibility that opens better capital options. The ones who haven't adapted are learning that you can't outgrow a cash flow problem.

---

# 5 Accounts Receivable Metrics Every Cannabis CFO Should Track

URL: https://www.tryheadquarters.com/blog/5-accounts-receivable-metrics-every-cannabis-cfo-should-track
Published: 2026-01-29
Summary: These five metrics give CFOs the visibility needed to protect cash flow and identify collection bottlenecks before they become liquidity crises.

Cash conversion velocity separates cannabis operators who scale from those who stall. In an industry where traditional financing remains scarce and 280E compresses margins, AR efficiency isn't a back-office function - it's a strategic lever.

These five metrics give CFOs the visibility needed to protect cash flow and identify collection bottlenecks before they become liquidity crises.

## 1. Days Sales Outstanding (DSO)

DSO measures the average number of days between invoicing and payment collection. For cannabis operators dealing with extended retailer payment terms and inconsistent enforcement, DSO reveals whether your credit policies match market reality.

**Calculation:** (Accounts Receivable ÷ Total Credit Sales) × Number of Days

**What it tells you:** Rising DSO signals deteriorating payment behavior across your customer base. In cannabis wholesale, where retailers frequently stretch terms during slow seasons, DSO spikes often precede cash crunches by 30-60 days. Track DSO by customer segment - dispensary chains behave differently than independent retailers.

## 2. Collection Effectiveness Index (CEI)

CEI measures how effectively your team collects receivables that were available for collection during a given period. Unlike DSO, CEI accounts for timing and isolates collection performance from sales volume fluctuations.

**Calculation:** (Beginning Receivables + Monthly Credit Sales − Ending Total Receivables) ÷ (Beginning Receivables + Monthly Credit Sales − Ending Current Receivables) × 100

**What it tells you:** CEI above 80% indicates functional collection processes. Below that threshold, examine whether the problem is process (inconsistent follow-up), people (under-resourced AR team), or policy (terms that don't match customer payment behavior). Cannabis operators often discover CEI drops correlate with sales team turnover - new reps may not enforce payment terms as aggressively.

## 3. Accounts Receivable Turnover Ratio

AR turnover measures how many times per year you collect your average receivables balance. Higher turnover means faster cash conversion.

**Calculation:** Net Credit Sales ÷ Average Accounts Receivable

**What it tells you:** This ratio contextualizes DSO within your sales volume. A company with $10M in annual sales and $2M in average AR has turnover of 5x - collecting the full receivables balance roughly every 73 days. Compare turnover across quarters to identify seasonal patterns. Many cannabis wholesalers see turnover drop Q1 as retailers conserve cash post-holiday, then recover Q3-Q4.

## 4. Average Days Past Due

While DSO measures the full invoice-to-payment cycle, average days past due isolates delinquency - how far beyond terms your customers actually pay.

**Calculation:** Weighted average of days past due across all overdue invoices

**What it tells you:** This metric separates structural payment delays from policy issues. If your terms are Net 30 and average days past due is 15, customers are paying at Net 45 regardless of what the invoice says. That's a pricing problem, not a collections problem. Use this metric to inform credit policy adjustments and identify customers who chronically pay late but remain profitable enough to retain.

## 5. Bad Debt to Sales Ratio

Bad debt ratio measures uncollectible receivables as a percentage of total credit sales. In cannabis, where customer financial instability is common and legal remedies are limited, this metric directly impacts margin.

**Calculation:** Bad Debt Write-offs ÷ Total Credit Sales × 100

**What it tells you:** Track this metric monthly, not just at year-end write-off. Rising bad debt ratios often lag economic stress by 90-120 days - by the time write-offs hit, the underlying problem has metastasized. Segment analysis matters: if bad debt concentrates in a specific region or customer type, adjust credit limits proactively rather than absorbing losses reactively.

## Connecting Metrics to Action

These five metrics form an interconnected system. DSO provides the headline number; CEI diagnoses collection execution; turnover contextualizes performance against sales volume; days past due isolates delinquency from structural delays; bad debt ratio quantifies the cost of failures across the system.

Review them together monthly. When multiple metrics move adversely simultaneously, prioritize investigation over incremental process changes - the root cause is likely systemic.

Common questions:

Q: What is a healthy Collection Effectiveness Index?
A: Above 80% indicates functional collection processes. Below 75% signals a failure in process, people, or policy. CEI isolates collections performance from sales volume in a way DSO cannot, which makes it the better diagnostic when sales teams turn over and new reps stop enforcing terms.

Q: How do you calculate DSO?
A: Divide accounts receivable by total credit sales, then multiply by the number of days in the period. Track it by customer segment rather than in aggregate, because dispensary chains and independent retailers behave differently and a blended number hides the single-account concentration that actually kills brands.

Q: What does average days past due tell you that DSO does not?
A: It isolates delinquency from the full invoice-to-payment cycle. If your terms are Net 30 and average days past due is 15, customers are consistently paying at Net 45 regardless of what the invoice says. That is a pricing problem to solve, not a collections problem.

---

# Turn Your SOP into a Chatbot for New Budtenders in Under an Hour

URL: https://www.tryheadquarters.com/blog/legacy-turn-your-sop-into-chatbot-for-new-budtenders
Published: 2025-06-28
Summary: The traditional training approach of lengthy manuals and overwhelming information dumps is failing both dispensaries and budtenders.

**The cannabis retail landscape has never been more demanding.** New budtenders need to master complex product knowledge, navigate evolving compliance requirements, and deliver exceptional customer service - all while working in a fast-paced environment where mistakes can cost licenses. The traditional training approach of lengthy manuals and overwhelming information dumps is failing both dispensaries and budtenders.

**Here's the breakthrough:** AI chatbot technology can transform your Standard Operating Procedures into an interactive, always-available training assistant that gets new budtenders productive in days, not weeks. This isn't just about automation - it's about creating personalized, engaging training experiences that actually stick.

The best part? **You can have a fully functional training chatbot operational in under an hour** using the right tools and approach. This comprehensive guide walks you through exactly how to do it, with step-by-step instructions, cannabis-specific examples, and real-world implementation strategies that have already proven successful in dispensaries across multiple states.

### The cannabis training challenge demands a modern solution

Cannabis dispensaries face unique training challenges that traditional retail doesn't encounter. **Budtenders must simultaneously master product expertise, regulatory compliance, and customer consultation skills** - all while the legal landscape continues evolving. State regulations vary dramatically, with Colorado requiring mandatory Responsible Vendor Training every two years, Oregon demanding 70% test scores on OLCC courses, and California implementing increasingly strict DCC compliance standards.

The cost of inadequate training extends far beyond employee turnover. **Compliance violations can result in license suspension or revocation**, while poorly trained staff create negative customer experiences that directly impact revenue. Meanwhile, the labor shortage means dispensaries are hiring more frequently, creating a continuous cycle of training demands that strain management resources.

Traditional training methods are particularly inadequate for cannabis retail. Static manuals become outdated quickly as regulations change and new products enter the market. **Classroom-style training sessions are expensive, time-consuming, and don't accommodate different learning styles** or work schedules. Most critically, they don't provide the interactive, scenario-based practice that budtenders need to handle real customer situations confidently.

## Three flagship AI chatbot platforms that transform training

After extensive research and testing, these 3 platforms offer the best combination of features, affordability, and ease of implementation for cannabis dispensary training:

### 1. Botpress - Best free option for small dispensaries

**Why it works:** Botpress offers a generous free tier with 100MB of vector database storage - enough for approximately 20,000 PDF pages. **The visual flow builder makes it easy to create branching conversation paths** for different training scenarios.

**Setup process:**

- Sign up at botpress.com (no credit card required for free tier)
- Use the Knowledge Base feature to upload SOPs and training materials
- Create conversation flows using the visual builder
- Set up different training paths for various experience levels
- Deploy via website widget or integrate with existing systems

**Cannabis-specific features:**

- Multi-channel deployment (website, WhatsApp, Teams)
- Advanced conversation analytics to track training progress
- Integration capabilities with POS systems and inventory management
- Custom branding to match dispensary aesthetic

**Pricing:** Free for 100MB storage, then $15/month per user

### 2. Microsoft Copilot Studio - Best for enterprise compliance

**Why enterprises choose it:** **Built-in enterprise-grade security and compliance features** make this ideal for multi-location dispensaries or those prioritizing regulatory audit readiness. Deep integration with Microsoft 365 provides seamless document management.

**Setup process:**

- Access through Microsoft 365 admin center
- Upload documents via SharePoint integration
- Use the "Conversational boosting" feature for natural responses
- Configure security settings for sensitive compliance data
- Deploy through Teams or embed on website

**Cannabis-specific advantages:**

- Enterprise-level audit trails for compliance documentation
- Role-based access control for different training levels
- Integration with Power BI for advanced training analytics
- Automatic compliance with data protection regulations

**Pricing:** $200/month per tenant (includes 2,000 messages)

### 3. DocsBot AI - Most user-friendly for non-technical teams

**Why it's simple:** **DocsBot AI specifically designed for document-to-chatbot conversion** with minimal technical knowledge required. The platform supports 37+ document formats and provides cannabis-friendly templates.

**Setup process:**

- Register at docsbot.ai and choose your plan
- Upload documents using drag-and-drop interface
- Customize bot personality and add dispensary-specific language
- Configure compliance disclaimers and response boundaries
- Embed on website using provided code snippet

**Cannabis-specific benefits:**

- Pre-built retail training templates
- Automatic compliance disclaimer insertion
- Real-time inventory integration capabilities
- Multi-language support for diverse customer bases

**Pricing:** Free tier available, paid plans from $19/month

## Step-by-step implementation guide for any platform

### Phase 1: Document preparation and content audit (15 minutes)

**Gather your existing materials systematically.** Start with core documents: employee handbook, product catalogs, compliance procedures, customer service protocols, and POS system guides. **Convert everything to supported formats** (PDF, Word, or plain text) and ensure consistent formatting with clear headings and bullet points.

**Optimize content for AI processing.** Remove references like "as mentioned above" since users won't have full document context. **Add specific examples and scenarios throughout** rather than abstract policies. For instance, instead of "Check ID thoroughly," write "Check ID thoroughly - verify photo matches customer, check expiration date, and scan barcode if available."

**Structure your knowledge base logically:**

- **Product Information:** Strain categories, effects, dosing guidelines, pricing
- **Compliance & Legal:** Age verification, purchase limits, ID requirements, reporting procedures
- **Customer Service:** Greeting protocols, recommendation frameworks, complaint handling
- **Operations:** Opening/closing procedures, inventory management, POS operations

### Phase 2: Platform setup and initial training (20 minutes)

**Choose your platform based on specific needs.** For quick deployment with excellent document handling, start with ChatGPT Projects. For budget-conscious dispensaries, Botpress offers the most features in its free tier. **Enterprise dispensaries requiring audit trails should select Microsoft Copilot Studio.**

**Configure your chatbot personality carefully.** Set clear boundaries: "I provide information about cannabis products and policies but cannot give medical advice. Always consult healthcare professionals for medical questions." **Include compliance reminders in every product recommendation** and ensure responses include age verification language.

**Upload documents strategically.** Start with 5-10 core documents rather than everything at once. **Test the chatbot's responses after each upload** to ensure it's processing information correctly. Add more documents gradually as you refine the training.

### Phase 3: Training scenario development (15 minutes)

**Create realistic customer scenarios your budtenders encounter daily.** Focus on situations that require both product knowledge and compliance awareness:

**Customer Service Scenario:**"A nervous first-time customer asks for something to help them relax but doesn't want to feel 'high.' They mention they have anxiety and want to avoid making it worse. How would you help them?"

**Compliance Scenario:**"A customer presents an ID that expires tomorrow. The photo looks like them but appears to be from several years ago. Their appearance has changed significantly. Can you complete the sale?"

**Product Knowledge Scenario:**"A customer wants to know the difference between smoking, vaping, and edibles for pain relief. They're a medical patient who currently uses prescription opioids and wants to reduce their dependence."

**Build progressive learning paths.** Start new hires with basic cannabis education and legal compliance, then advance to customer consultation and specialized products. **Each scenario should include clear learning objectives and success criteria.**

### Phase 4: Testing and optimization (10 minutes)

**Test your chatbot thoroughly before staff deployment.** Have team members ask difficult questions and unusual scenarios. **Verify that compliance responses are accurate and current** for your specific state regulations. Check that the chatbot appropriately handles questions outside its scope by directing users to human supervisors.

**Monitor key performance indicators from day one:**

- **Training completion rates** (target: 95%+)
- **Knowledge retention scores** on follow-up quizzes (target: 85%+)
- **Time to productivity** for new hires (target: reduce by 40%)
- **Compliance confidence** measured through manager assessments

**Implement continuous improvement processes.** Review conversation logs weekly to identify knowledge gaps. **Update product information monthly** or whenever new inventory arrives. Adjust training modules based on customer feedback and compliance changes.

### ROI calculation for cannabis dispensaries

**Typical Dispensary Training Costs (Traditional Method):**

- **Manager Time:** 20 hours per new hire at $25/hour = $500
- **Training Materials:** $100-200 per employee
- **Lost Productivity:** 2-3 weeks at reduced efficiency = $1,500-2,000
- **Total per Employee:** $2,100-2,700

**Chatbot Training Implementation:**

- **Reduced Manager Time:** 5 hours per new hire = $125
- **Accelerated Productivity:** 1 week to full efficiency = $750 savings
- **Consistent Training Quality:** Reduces errors and customer complaints
- **Total Savings per Employee:** $1,200-1,800

**Break-even Analysis:**

- **Monthly Platform Cost:** $50 average
- **Employees Trained per Month:** 2-3 average
- **Monthly Savings:** $2,400-5,400
- **ROI:** 4,700-10,700% annually!

### Platform feature summary

## Advanced implementation strategies

### Multi-location dispensary deployment

**Standardize core training while allowing local customization.** Create a master knowledge base with universal compliance requirements and product education, then add location-specific modules for local regulations, inventory, and policies.

**Implement role-based access controls.** New budtenders access basic modules, while experienced staff get advanced consultation training. **Managers receive specialized modules on compliance auditing and staff development.**

**Use analytics to optimize across locations.** Compare training completion rates, knowledge retention scores, and customer satisfaction metrics between locations. **Identify best practices and scale successful approaches** across your entire operation.

### Integration with existing systems

**Connect your chatbot with [point-of-sale systems](/cannastack)** for real-time inventory updates in training scenarios. When teaching product knowledge, the chatbot can reference current stock levels and pricing.

**Link to scheduling systems** to provide just-in-time training reminders. **Send compliance refreshers before regulatory inspections** or product knowledge updates when new inventory arrives.

**Integrate with performance management systems** to track individual employee progress. **Create personalized learning paths** based on performance reviews and customer feedback.

### Measuring training effectiveness

**Track leading indicators of training success:**

- **Knowledge retention rates** through regular assessments
- **Training completion speeds** compared to traditional methods
- **Customer satisfaction scores** for chatbot-trained staff
- **Compliance audit results** and violation rates

**Monitor business impact metrics:**

- **Average transaction values** for trained staff
- **Customer return rates** and loyalty metrics
- **Employee retention** and job satisfaction
- **Time to productivity** for new hires

**Implement continuous feedback loops.** Survey customers about their budtender interactions. **Ask staff for training gap identification** and scenario requests. Use this feedback to continuously improve your chatbot training content.

## Future-proofing your cannabis training program

### Adapting to regulatory changes

**Cannabis regulations evolve constantly,** making your training program's adaptability crucial. **Build update workflows that push regulatory changes** to your chatbot immediately. Create alerts for staff when new compliance requirements take effect.

**Establish relationships with industry attorneys and compliance consultants** who can review your training materials. **Schedule quarterly compliance audits** of your chatbot content to ensure accuracy.

### Scaling with business growth

**Design your training system to grow with your dispensary.** Start with basic modules and expand as you add locations, products, or services. **Create modular content that can be combined** for different roles and experience levels.

**Plan for advanced features like multilingual support** as your customer base diversifies. Consider voice capabilities for hands-free training during busy periods.

### Staying competitive through innovation

**The cannabis industry rewards early adopters of training innovation.** Your investment in AI-powered training creates competitive advantages through:

- **Faster new hire onboarding** allowing rapid expansion
- **Consistent customer experiences** across all locations
- **Reduced compliance risks** through systematic training
- **Higher customer satisfaction** from better-educated staff

**Monitor emerging technologies** like virtual reality training modules and AI-powered customer simulation. **Build relationships with technology vendors** who understand cannabis industry requirements.

## Getting started today

Choose one of the recommended platforms based on your specific needs: We recommend **ChatGPT Projects for immediate deployment, Botpress for budget-conscious, or Microsoft Copilot Studio for enterprise requirements.**

**Start small but think big.** Upload your most critical training documents first: compliance procedures and basic product knowledge. **Test with a one staff member** and refine before full deployment.

**Remember that perfect is the enemy of good.** Your chatbot training system will improve over time through use and feedback.

Cannabis dispensaries that implement AI-powered training today will dominate tomorrow's competitive landscape. **Your budtenders will be better trained, your customers will be happier, and your business will be more compliant and profitable.** The technology exists, the implementation is straightforward, and the ROI is proven.

**Your competitive advantage is just one hour away.**

---

# What is RAG and Why Should Your MSO's Legal Team Care?

URL: https://www.tryheadquarters.com/blog/legacy-what-is-rag-20250625
Published: 2025-06-25
Summary: Discover the latest automation tools and technologies that can transform your cannabis business operations and increase efficiency.

[**Retrieval-Augmented Generation (RAG)**](https://en.wikipedia.org/wiki/Retrieval-augmented_generation) **technology has emerged as the most significant advancement in legal AI**, offering cannabis legal teams unprecedented capabilities to manage multi-jurisdictional compliance, regulatory monitoring, and contract analysis at scale. With legal AI adoption skyrocketing from 19% in 2023 to 79% in 2025, cannabis MSOs can no longer afford to ignore this transformative technology.

For cannabis MSOs managing operations across dozens of states with ever-changing regulations, RAG represents more than just another technology upgrade - it's a strategic necessity. The combination of federal prohibition creating unique compliance burdens, state-by-state regulatory variations, and the constant evolution of cannabis law creates an information management challenge that exceeds human capacity to track and analyze effectively. RAG technology finally provides a practical solution for managing this complexity while delivering measurable ROI through reduced legal costs, improved compliance accuracy, and enhanced decision-making speed.

## Understanding RAG

Retrieval-Augmented Generation fundamentally differs from traditional AI by combining the reasoning capabilities of large language models with real-time access to external knowledge bases. While conventional AI systems rely solely on their training data - which becomes outdated and may hallucinate false information - RAG systems actively retrieve current, relevant information from authoritative sources before generating responses.

**The RAG process operates through two critical phases**: First, when presented with a query, the system searches through vast databases of legal documents, regulations, and case law using advanced vector similarity matching that understands conceptual relationships, not just keyword matches. Second, the system augments the original query with this retrieved information, providing the language model with current, relevant context to generate accurate, source-grounded responses.

This architecture proves particularly powerful for legal applications because it addresses the **"hallucination crisis" that has plagued legal AI**. Even leading legal AI platforms still generate false information 17-33% of the time, but RAG systems show dramatic improvements in accuracy - up to 71% reduction in hallucination rates - by grounding responses in authoritative legal sources rather than potentially outdated training data.

Recent advances in RAG technology have made it especially suitable for cannabis legal operations. [**Long RAG systems**](https://arxiv.org/abs/2410.23000) now process entire document sections rather than fragmenting them into small chunks, preserving the contextual integrity essential for complex legal analysis. **Self-Reflective RAG (SELF-RAG)** incorporates evaluation mechanisms that assess when retrieval is necessary and critique generated outputs for accuracy, while **Adaptive RAG** tailors retrieval strategies based on query complexity - simple questions bypass unnecessary searches while complex multi-jurisdictional issues trigger comprehensive analysis.

The technical infrastructure supporting modern RAG systems includes sophisticated vector databases that store legal document representations as dense embeddings, capturing semantic meaning through transformer-based models. This enables similarity searches that understand legal concepts and relationships within cannabis regulations, going far beyond simple keyword matching to grasp the nuanced connections between state laws, federal guidance, and regulatory precedents.

## Current leading apps for legal practice

The legal tech landscape is seeing the most RAG implementations. [**Harvey AI**](https://www.harvey.ai/)**, valued at $5 billion with $75 million ARR in June 2025**, has expanded from 40 to 25 enterprise clients across 42 countries, providing sophisticated legal research and contract analysis capabilities built on OpenAI's foundation with legal-specific training. The platform's custom case law models, trained on the complete U.S. legal corpus, deliver multi-stage reasoning with fine-tuned embeddings specifically designed for legal applications.

[**LexisNexis**](https://www.lexisnexis.com/) has implemented proprietary GraphRAG technology using Shepard's Knowledge Graph, providing advanced citation verification with hyperlinked sources and comprehensive headnote coverage across their entire case collection. This integration of relationship data ensures authoritative responses grounded in established legal precedents, while [**Westlaw Precision AI**](https://training.thomsonreuters.com/media/Welcome+to+Westlaw+Precision/1_p5hf2w61) combines vector-based document retrieval with the West Key Number System for enhanced accuracy in legal research.

These platforms demonstrate measurable performance improvements: **70% average reduction in research time, 50% productivity increase in document review, and up to 3x ROI through decreased manual processing costs**. Legal departments implementing RAG systems report 90% reduction in document review errors and significant improvements in contract analysis accuracy, with 31% of legal departments currently using AI for contract analysis according to Thomson Reuters studies.

For document review and e-discovery, RAG systems provide intelligent categorization, automated privilege review, relevance scoring, and pattern recognition that identifies key evidence and document relationships. This capability proves particularly valuable for cannabis MSOs facing complex litigation across multiple jurisdictions, where the ability to quickly identify relevant documents and legal precedents can determine case outcomes.

## The unique MSO challenge

Cannabis Multi State Operators are in arguably the most complex regulatory environment in modern business. With cannabis legal in 40 states for medical use and 24 states for recreational use while remaining federally illegal, MSOs must navigate what industry experts describe as a "regulatory archipelago" - each state functioning as an independent island with unique compliance requirements, licensing procedures, and operational mandates.

**The compliance burden is staggering**: Cannabis MSOs must track an average of 16.7 required label attributes per state, ranging from 4 to 26 mandatory elements, with requirements varying dramatically between jurisdictions. California requires comprehensive testing protocols, universal symbols, Prop 65 warnings, and detailed nutritional panels, while Colorado mandates specific potency labeling formats, contaminant testing statements, and residency requirements. New York prioritizes social equity applicants with different licensing structures, and Florida operates a vertically integrated model limited to 25 licensed MMTCs.

**This regulatory fragmentation creates operational nightmares**. Former NBA player Al Harrington, founder of Viola Brands, explains: "The same strain in Colorado will be different in Michigan due to the environment. Regulations are state-specific, so we have to adjust to different growing techniques, production methods, regulations, packaging, and sometimes THC limits." MSOs must maintain separate compliance officers in each state, with failure to comply resulting in fines, license suspension, or forced business closure.

The financial stakes compound this complexity. **Section 280E tax provisions** create effective tax rates of 40-80% versus 21% for traditional corporations, with leading MSOs like [Trulieve filing for $143 million in 280E tax refunds](https://www.prnewswire.com/news-releases/trulieve-announces-filing-of-amended-federal-tax-returns-claiming-143-million-refund-301955634.html) and [Verano expecting $80-100 million in annual 280E costs](https://investors.verano.com/news-releases/news-release-details/verano-announces-first-quarter-2025-financial-results). These financial burdens make compliance efficiency not just operationally important but financially critical for survival and growth.

**Banking restrictions add another layer of complexity**. Most MSOs operate as cash-intensive businesses due to federal banking limitations, creating intricate reporting requirements for cash transactions over $10,000 and complex compliance with FinCEN guidance for any financial institutions willing to work with cannabis businesses.

Contract management across jurisdictions presents unique challenges where different state laws apply, cannabis contracts face enforceability questions due to federal illegality, and courts may refuse to enforce agreements related to federally illegal activities. Leading cannabis legal experts recommend including state court jurisdiction clauses, choosing governing law from cannabis-friendly states, and maintaining arbitration provisions with state-specific requirements - all requiring deep knowledge of varying jurisdictional frameworks.

## Choosing RAG apps for cannabis legal operations

RAG technology addresses these cannabis-specific challenges through targeted applications that deliver immediate operational value. **Regulatory compliance monitoring** represents the highest-impact use case, where RAG systems continuously track regulatory changes across multiple state jurisdictions, automatically flagging relevant updates and providing contextualized analysis of operational impacts.

Consider the complexity: cannabis regulations change weekly across different states, with new legislation, regulatory guidance, and administrative rulings constantly shifting compliance requirements. RAG systems can monitor state regulatory databases, legislative sessions, and administrative announcements across all operational jurisdictions simultaneously, identifying changes relevant to specific MSO operations and providing immediate analysis of compliance implications.

**Multi-jurisdictional contract analysis** showcases RAG's sophisticated capabilities. When analyzing master service agreements, RAG systems can automatically verify compliance with state-specific cannabis advertising restrictions, taxation requirements, and operational mandates. The system retrieves relevant state laws, regulatory guidance, and precedent cases, then analyzes contract language against these requirements to identify compliance gaps, jurisdictional conflicts, and risk factors.

**Legal research spanning different state frameworks** becomes dramatically more efficient through RAG implementation. Instead of manually researching cannabis law across multiple states, legal teams can query RAG systems for comprehensive analysis of how specific issues - such as social consumption, home cultivation, or interstate transport - are addressed across all operational jurisdictions. The system provides synthesis of complex regulatory landscapes, identification of conflicting state requirements, and analysis of relevant precedents.

**Automated regulatory filing and reporting** delivers significant operational efficiency. RAG systems can extract relevant information from operational data and format filings according to state-specific requirements, reducing manual filing errors, ensuring consistent reporting across jurisdictions, and providing automated deadline tracking with template-based filing generation.

**Risk assessment and due diligence processes** benefit from RAG's comprehensive analysis capabilities. When evaluating new market entry, acquisition opportunities, or operational changes, RAG systems can automatically analyze potential legal risks across jurisdictions, provide due diligence document analysis, track compliance history, and develop predictive risk models based on regulatory patterns and enforcement activities.

## Implementation considerations for cannabis legal teams

Successful RAG implementation requires careful attention to security, integration, and change management considerations unique to cannabis legal operations. **Data security and attorney-client privilege protection** represent paramount concerns, requiring end-to-end encryption for all communications, role-based access controls with matter-specific permissions, SOC 2 Type II certification from vendors, and on-premise deployment options for highly sensitive matters.

Cannabis legal teams must implement hybrid cloud/on-premise solutions balancing security with accessibility, establish clear data governance policies for AI tool usage, and conduct regular security audits with employee training on AI security protocols. The vendor due diligence process should verify data encryption standards, retention and deletion policies, third-party audit certifications, breach notification procedures, and geographic data storage requirements.

**Integration with existing legal technology stacks** requires careful planning around common integration points including document management systems (NetDocuments, iManage, LexWorkplace), case management systems (Legal Files, SmartAdvocate, MyCase, Clio), contract management platforms, and time tracking and billing systems. Technical considerations include API availability, single sign-on capabilities, data migration requirements, workflow automation possibilities, and mobile accessibility.

**Cost-benefit analysis reveals compelling economics**: Professional-grade RAG solutions cost $400-500 monthly per user, with implementation services ranging $10,000-50,000 depending on complexity, training investments of $5,000-15,000, and integration development costs of $15,000-40,000 for complex implementations. However, expected benefits include 50-70% reduction in legal research time, 43% increase in response accuracy, up to 3x decrease in overall research and compliance costs, and reduced compliance violations with associated penalties.

The typical ROI timeline spans 6-12 months for full realization, with the calculation framework considering annual savings from hours saved multiplied by hourly rates, plus avoided penalties and efficiency gains. For a mid-sized MSO legal team, this often translates to hundreds of thousands in annual savings through improved efficiency and reduced compliance risks.

## Current limitations and risk management

Despite significant advances, RAG technology faces important limitations that cannabis legal teams must understand and mitigate. **The hallucination problem persists**: even with RAG implementation, leading legal AI tools still generate false information 17-33% of the time, with Stanford studies finding LLMs hallucinated 69-88% of the time on specific legal queries and GPT-4 hallucinating at least 49% of the time on basic case summary tasks.

**Real-world consequences have emerged**: at least 158 documented cases of AI hallucination in court filings globally, with multiple sanctions imposed on attorneys including $2,000+ penalties and mandatory CLE requirements. High-profile cases like Mata v. Avianca, which involved fabricated case citations, highlight the critical importance of human verification for all AI-generated legal content.

**Professional responsibility implications** extend Model Rule 1.1 (competence) and Rule 1.3 (diligence) obligations to AI use, requiring human verification of all AI outputs, raising ethical concerns about billing for AI-assisted work, and creating client confidentiality risks with cloud-based AI systems. The ABA's Formal Opinion 512 provides foundational framework for ethical AI use, while state bar associations are issuing specific guidance emphasizing lawyer competence, client confidentiality, and billing transparency.

Cannabis legal teams must implement robust risk mitigation strategies including comprehensive backup and disaster recovery for data loss prevention, high availability and redundancy for system downtime protection, rollback procedures for integration failures, strict access controls for privilege protection, human oversight for regulatory compliance, and defense-in-depth security architecture for data breach prevention.

**Technical limitations include** "sycophancy" issues where AI agrees with incorrect user assumptions, failure to identify when legal precedents have been overturned, context limitations in understanding complex multi-jurisdictional matters, and inconsistent performance across different legal domains. These limitations necessitate careful implementation with appropriate verification protocols and human oversight.

## Future outlook and emerging opportunities

The cannabis legal technology landscape is positioned for dramatic transformation through emerging AI developments. **Agentic AI represents the next frontier**, with 25% of enterprises expected to deploy AI agents in 2025, growing to 50% by 2027. This shift from supervised AI tools to autonomous "AI colleagues" handling complex workflows promises to revolutionize how cannabis legal teams manage multi-jurisdictional compliance.

**Cannabis-specific AI platforms are emerging** to address industry unique requirements. [CannabisRegulations.ai](https://www.cannabisregulations.ai/) provides state-trained AI compliance chatbots with real-time regulatory updates and marketing compliance review tools. [ChatCSG + Compliance](https://cannaspyglass.com/solutions/consultants) from CannaSpyglass offers the first cannabis data analytics platform with integrated AI, providing comprehensive cannabis regulations across all U.S. markets with regulatory citation capabilities.

**Federal legalization dynamics** will significantly impact cannabis legal AI requirements. Cannabis rescheduling to Schedule III appears inevitable, potentially eliminating 280E tax restrictions and increasing company valuations eight-fold. This transition will require FDA/OSHA compliance preparation as federal oversight increases, creating opportunities for sophisticated compliance frameworks managing both state and federal requirements simultaneously.

**Technological advances** promise enhanced capabilities: breakthrough AI reasoning capabilities with models achieving 157 IQ equivalent scores, mainstream deployment of AI agents for complex legal tasks, quantum computing integration accelerating AI processing speeds, and integration with state tracking systems like [METRC](https://www.metrc.com/) for automated compliance monitoring.

The productivity impact appears transformative. **AI could save cannabis lawyers 4 hours per week**, translating to massive efficiency gains for legal operations. Industry experts predict AI may replace entry-level lawyers within 5 years, while creating opportunities for higher-value strategic legal work. This shift is driving evolution in business models, with 43% of legal professionals predicting decline in hourly billing models by 2030 and growth in alternative fee arrangements.

## Practical next steps for MSO legal teams

Cannabis MSO legal teams should begin RAG implementation with systematic evaluation and planning. **Immediate actions** include conducting comprehensive technology audits to assess current legal technology stacks and integration points, defining use case priorities by identifying highest-impact RAG applications for specific operations, completing security requirements assessments, and developing comprehensive cost estimates for implementation planning.

**Short-term actions** involve thorough vendor evaluation using established criteria weighing functional capabilities (40%), security and compliance (30%), vendor stability and support (20%), and cost and value (10%). Design pilot programs with clearly defined scope and success metrics for initial implementation, secure executive support and legal team buy-in, and complete security and compliance approval processes.

**Vendor selection** should consider Harvey AI for large MSOs with significant legal budgets, Thomson Reuters CoCounsel for organizations already using Thomson Reuters products, and Callidus Legal AI as a cost-effective alternative for mid-sized MSOs. Evaluate emerging players like Spellbook for contract drafting, Paxton AI for broad legal capabilities, and cannabis-specific platforms for specialized compliance applications.

**Implementation strategy** should follow a four-phase approach: Foundation (months 1-2) focusing on vendor selection and core team training, Pilot Implementation (months 3-4) deploying single use cases starting with regulatory monitoring, Expansion (months 5-8) adding use cases and full team training, and Optimization (months 9-12) achieving full feature utilization with continuous improvement processes.

**Success metrics** should track efficiency improvements including 50-70% target research time reduction, quality metrics measuring accuracy against manual review baselines, cost metrics evaluating legal operations cost per transaction, and ROI achievement timelines. Establish comprehensive monitoring systems for technical risks, legal compliance risks, and operational risks including user adoption and over-reliance concerns.

## Competitive advantage through strategic AI adoption

The cannabis industry stands at a technological inflection point where early adopters of RAG technology will gain significant competitive advantages in managing complex regulatory environments. **The regulatory complexity that defines cannabis operations makes it an ideal application** for advanced legal AI, where the ability to instantly access, analyze, and synthesize information across multiple jurisdictions becomes a strategic differentiator.

MSOs that strategically implement RAG technology while maintaining appropriate human oversight will achieve operational excellence through improved efficiency, enhanced accuracy, and reduced compliance costs. The financial stakes - with compliance failures resulting in license suspension, business closure, or millions in tax penalties - make advanced AI tools essential infrastructure rather than optional enhancements.

**Success depends on thoughtful implementation** balancing early adoption benefits against inherent risks through careful vendor selection, comprehensive security planning, and systematic deployment with robust verification processes. Cannabis legal teams that understand both the transformative potential and current limitations of RAG technology will be best positioned to leverage these tools effectively while maintaining the professional standards and ethical obligations that define legal practice.

The future of cannabis legal operations will be defined by organizations that recognize RAG technology as strategic infrastructure for managing regulatory complexity, enable their legal teams with cutting-edge tools while preserving human judgment and expertise, and continuously adapt to both technological developments and evolving regulatory landscapes. The question is not whether cannabis MSOs will adopt RAG technology, but how quickly and effectively they can implement it to gain competitive advantage in an increasingly complex and competitive industry.

---

# Is Quickbooks Cannabis Friendly?

URL: https://www.tryheadquarters.com/blog/legacy-is-quickbooks-cannabis-friendly-20230321
Published: 2023-03-21
Summary: Complex regulatory environment, evolving legal landscape, and unique tax considerations make it crucial for cannabis businesses to use specialized accounting tools that can meet their specific needs.

Complex regulatory environment, evolving legal landscape, and unique tax considerations make it crucial for cannabis businesses to use specialized accounting tools that can meet their specific needs. One such tool that has gained popularity among cannabis businesses is QuickBooks, a widely-used accounting software that can be customized to cater to the cannabis industry.

For example, QuickBooks allows you to set up a customized chart of accounts that is tailored to the unique financial reporting requirements of the cannabis industry. You can create accounts for specific cannabis-related expenses such as cultivation costs, lab testing fees, and excise taxes. Majority of cannabis companies we work with do these 4 things:

**1. Cannabis Product Type Specific Reporting:** You can generate reports that are specific to the cannabis industry, such as sales by product type, strain, or customer segment. These reports can help you identify trends, analyze costs, and make informed business decisions. QuickBooks also provides state-specific tax reports, which can simplify the complex process of calculating and filing cannabis taxes in compliance with local regulations.  
  
**2. Integrate with cannabis-specific POS systems** and seed-to-sale tracking software, allowing businesses to automate many of their financial processes. One of the key features of Quickbooks is its ability to integrate with other software tools with it's flexible API.  
  
**3. Inventory Management:** The cannabis industry has strict regulations around inventory tracking and reporting. QuickBooks allows you to manage your cannabis inventory with precision. You can track cannabis products from seed to sale, record all inventory transactions including purchases, sales, and transfers, and generate detailed reports on inventory levels, cost of goods sold, and product margins. This helps you stay compliant with local regulations and make informed inventory management decisions.  
  
**4. Compliance Features:** QuickBooks has built-in compliance features that can help cannabis businesses stay compliant with industry-specific regulations. For example, QuickBooks allows you to track and report on [cannabis-related taxes](https://www.cdtfa.ca.gov/industry/cannabis.htm), such as excise taxes and sales taxes, ensuring that you are accurately calculating and reporting your tax liabilities. QuickBooks also provides audit trail functionality, which allows you to track changes to your financial data and maintain a clear record of all financial transactions, supporting your compliance efforts.

## Who Should Use QuickBooks?
  

  

  

## Who Shouldn't Use QuickBooks?
  

  

  

  

## Conclusion

While QuickBooks can be a suitable accounting solution for small to mid-sized cannabis businesses and service-oriented companies, it may not be the best fit for large-scale cannabis operations, manufacturers, distributors, cultivators, or retailers with multiple locations.  
  
It's important to carefully assess your cannabis business's unique accounting needs, including inventory management, compliance requirements, and reporting complexity, and consider whether QuickBooks or other specialized accounting software would be more appropriate. Consulting with a cannabis accounting expert can also help you make an informed decision on the best accounting software for your cannabis business, ensuring efficient financial management and compliance with industry-specific regulations.

---

# Most Innovative Cannabis Products (2022)

URL: https://www.tryheadquarters.com/blog/legacy-most-innovative-cannabis-products-20220116
Published: 2022-01-16
Summary: Cannabis companies are hiring experienced consumer packaged goods (CPG) executives away from Fortune 100 companies to lead product innovation.

Cannabis product innovation is more important than ever. As the industry gets more competitive, new consumers enter the market and they develop both product and brand preferences. Cannabis companies are hiring experienced consumer packaged goods (CPG) executives away from Fortune 100 companies. With this leadership in place, you can bet cannabis product innovation will be a top priority for many companies. With that, here are our top picks for cannabis product innovation in 2022:

### Cann Social Tonics

Founded in Los Angeles by Harvard and Stanford graduates Luke Anderson and Jake Bullock, Cann is the #1 selling THC-infused drinks globally. They offer a range of microdosed, lightly carbonated beverages. You can(n) enjoy more than one, and experience a light, refreshing social buzz within 10-15 minutes. With five simple all-natural ingredients, and 30-35 calories per Cann, they make the perfect substitute for that glass of wine, but without the hangover the next morning. The brand is backed by celebrity investors, including Gwyneth Paltrow, Baron Davis, Rebel Wilson, Ruby Rose, Darren Criss, Casey Niestat, Tove Lo and Bre-Z.

### Click Spray

Backed by industry insiders, Click Spray simplifies the cannabis experience. Simply spray under the tongue and feel effects in as little as six to eight minutes. Click’s unique formulation offers control for how much cannabis their customers consume, and the discreet bottle design allows Click to go wherever they go. Their line of four sprays: "Go", "Restore", "Chill" and "Dream", all serve as a healthier alternative to smoking.

### Pop-Up Potcorn

Pop-Up Potcorn is a trendy cannabis brand that creates three unique mixtures of cannabis-infused popcorn, or "potcorn," as they prefer to call it. Many cannabis consumers have made their own cannabis-infused popcorn at home, but Pop-Up makes it a bit more convenient, and eliminates the need for making your own cannabutter or oil. The THC combination from Pop-Up Potcorn is designed to make you feel "buzzed." This product is ideal for a movie night in with friends and truly works to spice up snack time.

### Pilgrim Soul 

Pilgrim Soul is the first cannabis company created to enhance creative performance. It is a mission-driven brand that aims to provide people a competitive edge in both life and business by enhancing their creative thinking. Their Live Resin Vape Pens feature unique combinations of the most creative, dynamic strains available at top cannabis retailers in California. Pilgrim Soul analyzed hundreds of cannabis strains that index high for creativity, along with secondary and tertiary states of mind, with blends for Creative Awareness, Creative Imagination, Creative Focus and Creative Reflection. Each vape pen is paired with a section of The Creative Thinking Journal to further enhance your creativity.

### House of Saka

If the cannabis-infused beverage manufacturer House of Saka from California has shown anything, it's that it's not afraid to go against the grain. This female-led business carved out a large niche in the fastest-growing segment of the cannabis market. House of Saka Spark "Mimosa" is the first cannabis-infused sparkling wine without alcohol. Saka's distinctive product and packaging were made to stand out in the sea of infused seltzers saturating the legal cannabis market. Available in single-serve, 187ml champagne bottles with 5mg THC per bottle, all the flavor and celebration of a typical mimosa are present in Saka Spark's "Mimosa," but without extra calories coming from alcohol.

### TSUMo Snacks

TSUMo Snacks brand offers consumers a distinctive and nostalgic snacking experience by fusing well-known salty and savory ingredients. Rap legend and culinary icon Snoop Dogg collaborated with TSUMo Snacks on creating Uncle Snoop’s Snazzle Os. They arrive in two flavors, Onion and Spicy Onion, both of which have abundant taste and 100mg of THC per bag-a respectable dosage deserving of the hip-hop icon's endorsement.

### Purejuana

One of the newest alternatives in the quickly expanding market for cannabis-infused drink additives is Purejuana, a soluble powder that can be added to any beverage to amplify its THC content. It is vegan, gluten-free, and low in calories. There is a manageable 2.5-milligram dose available for individuals taking baby steps into the baked-by-a-beverage arena, in addition to the 5-milligram and 10-milligram levels intended for more experienced users. It also serves up a weedy, terpene-packed punch, especially when mixed with a neutral-flavored beverage like water or club soda, thanks to a production procedure that maintains the inherent flavor profile of the marijuana plants.

### Cheeba Chews Edibles

Born in Colorado in 2009, Cheeba Chews is known for its consistently delicious award-winning confections. From original chocolate and caramel chews to newer offerings—such as the Sleepy Chews and Trifecta lines of low-calorie, fat-free taffies featuring an entourage of emerging cannabinoids like CBG and CBN—Cheeba Chews’ unique products tap into the increasingly in-demand cannabis derived wellness market. With a focus on quality and consistency, consumers trust Cheeba Chews to deliver in taste and reliability. In essence, Cheeba Chews are basically cannabis-infused Tootsie Rolls with different strengths and, as of late, additional flavors.

### Sonder Space Crystals

Sonder's cannabis is solely sun-grown, using only responsibly grown flower from farmers Leif and Jessica Bolin in Mendocino County. Sonder Space Crystals come in Peachy Passion, Pineapple Party, Stoned Fruit, and the Cheers Queers! Since the majority of the THC in Space Crystals remains in its original form as it is absorbed into your mouth's tissues, the high is more similar to a combination of smoking and eating cannabis than it is to that of a conventional edible. This is because Space Crystals function as a sublingual-edible hybrid.

### Kiva’s Everything Bagel Seasoning Munchies Bar

Kiva is a signature brand of decadent cannabis chocolate bar edibles. They carefully craft each bar using sustainably-sourced cacao, all-natural flavors, and clean, pure cold water hash for a richer, fuller cannabis experience that captures the essence of the whole plant. Kiva made an Everything Bagel Seasoning Munchies Bar, which is a weed-infused chocolate bar with everything bagel seasoning as a collaboration with LA bagel food truck pioneers The Yeastie Boys. The Munchies Bar is made with sweet, hash-infused dark chocolate and the traditional salty seasoning from Yeastie's. This limited-edition treat's sweet, salty, chocolaty, and hashy flavors will transform the way you wake and bake.

---

# The Shift, Ep 1: Mother of Cannabis

URL: https://www.tryheadquarters.com/podcast/ep1
Guest: Jennifer Muñoz
Summary: Industry veteran on building cannabis distribution, working the events circuit, and why people - not software - still drive this business.

Transcript (auto-generated, lightly edited):

Welcome to The Shift, a little series we put together to give you a real look inside HQ. It's not the polished version, the real one. Because at the end of the day, it's not the tools, it's not the systems, it's the people. The ones behind the screens, behind the calls, behind the deals. They're the reason everything actually works. So, this is where you get to meet them, hear how they think, how they move, and what really goes on behind the scenes. Let's get into it.

So, today I'm joined by someone who, if you spent any real time in cannabis, you've probably heard about one way or another, Jennifer Muñoz. Also known to many as Mama Jen, and to some, the mother of cannabis herself. She's been in the industry for years, she knows the people, she knows the game. She's lived the sales side, the relationship side, and she's one of those names that carries real weight when she walks in a room.

My very good Judy, my very good friend, Jen, welcome.

Thank you, Filip. That was a wild introduction. I appreciate it.

it? Do you want to share the story of how you and I met, or or when we started working together?

The first time that you and I met was over a Slack channel, and me begging for information on whether my invoices were paid or not. That's how I can definitely remember I definitely remember sending you messages all the time, and I just know there was a Filip. That's how we met.

Okay. And feel free to say. So, it was pretty much I was working at Nabis doing AR for Nabis, and you were working at Lime. And our stories kind of crossed through Slack because we were working together in some of the outstanding balances for the retailers that you were doing business with, right?

Exactly. Exactly.

And then what actually happened is how we met on a video call was when when you joined HQ.

This is true. And my first thing was apologizing to you for my behavior. I was just meant to collect invoices at that time. That was my very first thing.

But it was funny to me because I So So you have a very And then this is like you have a very specific easily easy to remember name, right? But also I've been working with you for It was probably like I'd say it like roughly a year. So I got your name stuck into my memory. And then when I heard you're joining HQ, I was like, "Okay, this is a person that I'm really familiar I really don't know." When when I saw you on the on the um meeting, the face and the actual name sort of made sense and the the tone of communication that we had and all that stuff. So it was it really really made complete sense.

And then I was like, "Oh my god, I'm so happy that this person is joining the company. This is going to be awesome." And the reason why I said that was I remember from back in the Nabis days, I remember you were really you were a really hard-working individual. Extremely hard

I was intense. It was an intense time, you know, I I think that's hence AR is intense, right? So um it was a very intense time. We had a lot of open invoices. Um and we needed a lot of help, so.

Yeah. And as soon as you came in, I was like okay, now we're in good hands good hands when it comes to sales. I was really happy. Um so, I was like, oh, she's going to do a good good deal for us. Oh, everywhere she goes. Um and yeah, that was that was really cool. Anyhow, let me let me switch to something that I was interested and I'm pretty sure everyone would would want to know as well. Cuz cuz you didn't actually start in cannabis, right? You started somewhere else.

You had a pretty big experience before cannabis and you know, you you've been in cannabis forever a long time now as well, but who was Jen before cannabis?

I worked at Wells Fargo for 10 years.

Uh-huh.

You just wanted me to bring up my event work, my my modeling

want you to Look, I want you to bring up everything that made you successful in sales in cannabis, which is ultimately your previous experience. So, how how did Jen become this master of sales?

I mean, I've I've always been in sales, but I mastered sales during my time at Wells Fargo. I was in the top five of the state, you know, and I worked in six different divisions within 10 years, so I was constantly creating and going to each different division, doing something and then moving on. It's always been my MO. But that's where I was really successful. I believe it or not, selling checking accounts is hard and investments through Wells Fargo is is definitely hard. It's definitely not an easy task.

And how were you successful? What was the reason that you were successful at doing what you're doing?

I mean, that's just my character. I'm just tenacious. I was always go go go. At one point, I worked in our in-store banking division and I was training people to close equity lines and loans down a grocery store aisle. So, they launched a huge uh it was called the in-store banking division and basically we were opening up checking accounts, boarding loans all over the place. So, that's really started it where I started the rogue sales if you will and that's where I became successful just trial and error.

Lot of lot of no's. Lot of no's. Going to take the rejection.

And so, when did the transition to cannabis started? How did it start?

You know, I like groundbreaking things. I'm very entrepreneurial and I saw an opportunity. Um I had a friend in packaging and he started to make these really big boxes which carried all the eights that were branded. So, I started in packaging and then quickly switched to a brand. Um packaging's boring. Selling means fun. So, that's how I transitioned.

And I can imagine the shock that when you came into this industry you were like, "Oh Jesus Christ, where did I end up being?" Like this is a complete chaotic mess. What's going on here? Where's everyone going? Where where where all of this is going? Was that your first reaction or how did it look for you?

No, I thrived because it's it there was no METRC at the time. So, we were just out for rogue selling. Um I was selling for Lowell Herb, which was a very popular brand back then. Really bougie, you know, start of the cannabis cafe. So, um I enjoyed it. You know, it you were just out selling. So, I it wasn't that crazy. It was uh it was actually fun. You know, it's when we were out and about. Um as it's grown it's gotten chaotic. But in the beginning it's a lot of fun. It's a lot of fun.

Okay. And and so as you were there from the very start and like looking through that entire journey. So so let's let's let's see the analytical Jen. What when when you look at the industry from like from the very beginning up until now first question what changed? And then second second question would be what do you notice a lot of these brands are doing or making mistakes that cause future problems for them?

Well, what's changed is we used to do the euphoria sell. So we just used to sell sell sell without any data because at the time we didn't have data. I mean we were just starting out right in California it was one of the largest and still is one of the largest um areas, you know, with about 900 plus uh retailers out there. Um at that time we were just selling, you know, I remember selling my first 40 lb like that was exciting. Whether they needed it or not was a whole another story. That was the euphoria sell. You could sell 5 million in a in one month and it was great. But the reality is was it moving from that store? We didn't have any of that data.

We didn't have anything but a field manager to go out and check on it and try to count the inventory, right? So what has changed now is we have data. We have data from Hoodie, from Headset, POS data from the actual uh shops to build orders. That's what's changed. But what's happened at least in California is accounts and shops have merged and people have been bought out. So all of a sudden the sales rep can spend three days behind a computer building out these orders which you know, we all want our sales reps out selling not building orders. Hence that's why we started the inside sales team here to help with that. Um that is a complete change from when it started or when when I first started almost 10 years ago.

That's that's actually a perfect intro because the next segment I was like so you came to HQ and were like, "Look guys, I see what you're doing. There is this amazing opportunity in the industry for this." And then you presented to us inside sales and you literally created this entire project. So, how did you notice that HQ had the possibility of executing inside sales to the level that we're doing right now?

And and how how is it working so far? Like, are you happy with it?

I'm 100% happy and what I noticed when I came to HQ is there's incredibly talented smart people here. And as a sales leader running a brand, you're not you're not really working on the operational side. So, I saw you guys collecting data, having all this information, and being able to build out a process in record time, right? With the knowledge. I mean, let's face it, brands are hiring sales analysts and if they are, they're rather large uh, companies and they're not focusing on building out an order for a sales rep.

So, that's where I saw the need. Um, and we tested it and it worked and it's working well. And there's a couple different ways that we go about this. So, when we initially started, there was a customer that came to us that's been around since 2015 that wanted to uh, cut costs. They wanted to eliminate some staff and they wanted to bring accounts in-house. Well, the accounts that they want to bring in-house are these large accounts um, that have 19 shops, 60 shops, 20 shops, you know, nine shops. So, my idea was let me build these orders for you, send it back to you, you go for approval with the buyer. So, really the shops don't know we're doing this busy work behind the scenes.

Um I can't even put a dollar figure on the amount of money that we're saving them. It's got to be close to 200,000, you know, a year if you think about it cuz they're cutting, you know, overhead and they're also cutting commission. Another customer that we have wanted to rebuild the brand, you know, re um just grow it by a million dollars. Well, the best way to do that is to have a back office, right? So, we're their back office. So, we again are building out orders for the sales rep so the sales rep can be out getting new business. So, we're doing all that busy work in the background, which is working really successfully, too. We were able, you know, to um increase their order size by about 50%.

And that's just by using data, using it accurately, using par levels, using delivery dates, using actual presence on the shelf. Um and then pivoting and changing those as, you know, the weeks change or as the month changes. Um we're able to identify um out of stocks. We're able to identify um what's moving and what's not and put these reports together for the brands um that a lot of brands don't have access to.

So, all of those um situations are really are working really well and we're now going to be moving um out of California and to New York and doing the same thing. Um New York doesn't have multiple shop owners. They might, but they still have separate buyers. So, again, you utilizing the same skill set um but, you know, in a smaller sequence, but more shops. So, it's very successful.

It's working. It's saving companies money. It's saving sales reps time. It's just an overall win-win.

Pretty much. So so it's it's the entire process is based on like we look at historics. We know the markets. We're going to do this for you. The shops are not going to know the sales because they're going to have more time to do whatever they want to do on the field. And we're going to increase the actual order sizes based on that historics, right?

Right. And we're using data. Like data What happens is data is dirty. A lot of people don't understand this and I didn't understand this until I came to HQ that a lot of the information that we have from POS systems is dirty. And what that means is the way that it was input or the way that I mean if there's just a slash off a dot off it doesn't come up right. So a lot of times you'll hear the sales rep say, "Oh, that you know, headset isn't accurate or so-and-so isn't accurate." But that's not a true statement. It's just the data is dirty. So when you get it, you might think, "Oh, I'm out of stock on that." So not only that, we take that data and clean it up so that we can make sure that we're making accurate decisions. So there's so much that goes into this that you really can't ask a sales rep to know or to do. I mean you know, it's they don't know how to clean data or nor do they know how to identify that. You know, so there there's so much more that we actually offer um as a service, you know, not just creating a pivot table on steroids, so.

Yeah. No, that makes complete sense. Now the other thing which is again very important and it sort of relates to this is so we even before you came in we had this other service which is um sales ops. Um and I'm not going to about it because you're you're better at describing the services well, but this is a place where you also figured out how you can how you can go and sell these services to or actually even better, you knew which brands are in need of this service. Can you tell us a little bit why this is a good service, why it's so popular in HQ?

Again, we want the sales reps out. If you're sitting behind your computer processing orders all day you can't do anything else. And a lot of times these bigger brands already knowing, okay, I'm mandatory going to get an order from XYZ and it's going to be a large order and those take time. That's why our order entry piece is is it's phenomenal for those types of brands. You know, when you're moving you know, 5 million a month, 10 million a month, even 1 million a month.

You know, it it's still time-consuming and it takes forever and especially if you have a lot of units to put on to an order. All of that takes time and we have figured out a solution to eliminate that. You know, we bring in a team to do so for each individual brand that we bring on. Um, and they're professionals at what they do. I um have never seen anything much like it to be quite honest and I'm not just saying that cuz I work here. I mean it's phenomenal like the way that they execute. Um, I see turnaround times anywhere from 15 minutes, sometimes faster.

Uh, they know what to ask. They know, um, you know, out of stocks. They know first in, first out. Uh, that's the one thing HQ specializes in is we know cannabis and that's all we've been doing is cannabis for the last 6 years. There's no ramp-up period. There's no training. I mean, there might be, okay, what's your policy? What we build out a SOP and then the team follows it.

Um it's a no-brainer when I know that there are some of these companies out there that need this help. You know, so it's just from me being in the industry for a long time, understanding who um can benefit from the service.

Yeah. And ultimately, again, it puts the sales guys actually on the field where they are supposed to be, and then we're going to do all of that boring, time-consuming work for you. Um cool. And so let me um go back to to something that's more of like uh Jim personal, right? Cuz we we had a bunch of conversations about a bunch of stuff. Uh you do often uh attend events, obviously, as the majority of people in the industry do.

I want to know cuz this is very it's a it's a very different Well, not a different, but like it's a very specific type of an approach that you have when you go to different events. Can you explain the strategy of when you go to cannabis events? How do you approach the event itself? And what is your main goal when you're going to cannabis events?

It depends on where I'm going. In California, I know most of you know the brands, the retailers, so it's a little bit different. But moving out of state, you I want to research, you know, the top 10, the top 50 players, be able to engage via LinkedIn, um be able to go to the events where I'm going to meet the key players, where I can present how I can save them money, and make them money, right? And we do all of that, cuz it's not just inside sales piece and and order ops.

You know, it's all of our collections and the amount that we collect across the United States and and how we do the process. That's the key thing is sure you can hire someone to collect AR, but we've figured out the secret sauce. Like we figured out how much time it takes. We track internally um from operational standpoint something that I've never seen before. Um and we figured that part out and we've been doing it. So there's always that and we are doing it for an affordable price. That's the other thing majority of our services are affordable. They're not, you know, outlandish. A lot of times we can even enhance an AR service or we can take over everything. So there's so many different things.

Even Filip just in the retail environment going in and taking over like their master data management services like we've been able to do that for several of our large retailers. And what that means is we're taking over their METRC. We're processing um orders that are coming in with our night team. And we're also um creating shells for new products and we're doing that all while everyone's sleeping so that the next day when they get receive the inventory, all of that paperwork is already processed. We're able to create a system behind that that makes that faster, more seamless. Um that's what we're good at. And that's what I see as a positive uh moving forward in our industry especially in our dispensaries where money is really tight. Taxes are tough.

Uh they're looking for other ways to save money and that's what we do. We save people money and they can also make money at the same time. It's two-fold.

And 2026 is especially crazy given that everything's, you know, happening in the world right now. So, it does make sense. But, let me So, if if I was a brand, right? And I came to you today and I I was like, "Jen, give me one piece of advice so that I can grow faster in 2026, what would you tell me?"

You need to have your sales reps out. Like, they need to be knocking on doors. They need to be upselling. They can't be behind the computer. We're giving them two days to be behind the computer and only three days to be out. Time is of essence. Right? Time is precious right now. Have your sales rep out. Have them have a plan. So many times it's like, "Oh, I'm going to see Filip today." You know, do you have a plan on what you're going to sell to Filip? Right? If you don't have a plan, if you haven't looked at his menu, if you haven't seen what your competition's doing, that's a problem.

And if you haven't said, "Okay, what is Filip going to say? And do I have that idea like I think Filip's going to say this, so my response is going to be this." I think Filip's going to say something about margin, here's my response to this, right? Like, having all of your ducks in a row and being out there. So, have a plan, one, and two, be out there.

I can't say that enough, and that's where HQ comes in to help with that. With the collections piece, with the inside sales piece, with the order entry piece, etc. from a brand standpoint.

Yeah, that that really now that I think about it, it really makes sense because ultimately what's happening is we are doing this stuff for you so that your sales rep can get more exposure, your brand can get more exposure cuz your sales reps are going to be on the field, but also you're thinking we're saving you a lot of time, ultimately saving you a lot of money as well.

Um but then when you think about that sort of preparation or planning as you said, think of the scenarios of what you what can happen on the field on those conversations cuz ultimately everything's about relationship in this industry. So when you prep when you plan when you prepare as you said, it makes a lot of sense. So

You have You can't just go in blind, right? You have to have type of a process in place or something that you know, how am I going to get Filip to add three more of my SKUs? I have 20 gummies. I only have 10, you know, what's the strategy behind that and how um we have an oversaturated market in California, right? And in a lot of states, um you know, the markets are getting oversaturated, it goes down. Um there's price compression. There's a lot of these situations. In California, there's not a lot of people growing their own product.

They're usually sourcing. So it can definitely cut into your margin if you make an error uh with pricing. So I mean, my strong suggestion to a brand is to have your sales rep out and have them have a plan. Right? I mean, there's so much like I'm watching again going back to the inside sales piece, how we sit with a sales rep and actually strategize and create a SOP behind it.

So for example, if you wanted to not just use the data, but you wanted to add new SKUs. I mean, we follow an SOP behind that. So there's everybody has a different story, a different tactic of how they want to do things and how they're going to get the buyer to, you know, approve these orders. We're just doing all the busy work, so we're basically a sales assistant for the sales rep.

Yeah.

I mean, what more could you ask for, right? And And for the people that are cutting costs altogether, um or even moving, you know, a lot of people are doing third party and they're thinking, "Okay, uh maybe that's not working. We're also an excellent source right then. So, maybe you only want to have one sales rep in the north, one sales rep in the south. We're an excellent, extremely affordable option to handle all the big accounts.

That's another uh situation that I've talked to a couple clients about um that we're currently getting ready to work with. So, it's I only have one sales rep in northern California, I only have one sales rep in southern California, I need help. Let me take the big accounts. Let me build out the orders for you, submit it back to you, sales director, or back to you, you know, leadership. You can shove that back over, get it approved, then we process it for you.

Yeah. And um that's that's very interesting because, you know, what you said is sort of like, "Oh, here's a solution uh to a lot of your issues. If you follow them, probably you're going to have them fixed. Obviously, mistakes can happen here and there, but given that and given what you just said, which is like, "Get your sales guys on the field, get them out." What do you How do you see the cannabis industry um in the next, let's say, 3 to 5 years from now?

I mean, I hope it's federally legal by then. That will uh solve a lot of issues brands are currently having retailers are having, right? Um until that time I think more shops will go into receivership. There will be a lot of of uh brands and retailers merging together. I think you'll see more wholesale selling. Um I definitely we see that now. We see some of the larger MSOs beyond the California.

Right? Um which I think is beneficial. Uh There's still you know listen, boutique cannabis is still going to be around and that's great. We we need that. I just think that more brands will consolidate, fall under one realm, you know, have better marketing, have better margins, have a better process in place. That's what I see happening. And I think you'll you'll see a lot of outsourcing and that's where we come in, you know, we're able to save money.

It's the name of the game and process it faster.

Yeah. And what's what's the Okay, so so this is a very good sort of ending to the I want to wrap it up now. And uh we kind of touched touched about the future of cannabis. But what I want you to tell me right now is like what was the thing that Jen learned in HQ that she didn't know before such as what you you actually gave us an example of I did not know that the data is so dirty at at that it needs to be cleaned.

Is there anything else that you've learned in it while while in HQ?

I I've learned so much. A lot of brands can't afford to have a sales analyst or an engineer or you know, someone that is a master at creating spreadsheets that are beyond what my scope, you know, or the majority of people's scope is. Um there's so much talent here and they're like, "Jen, I could do that and I can do that faster. I can do that better." So, there's so much knowledge here with cannabis.

So, that's the first step is like everyone knows cannabis here. Which is amazing because a lot of times you can hire a company and they they don't know, right? So, there's training, there's ramp up and usually usually doesn't work out. Here we already know that. And so, when I can identify a problem or a situation that I see in the industry I could run that by one of our team leads or our CEO and they're like, "Oh, we can solve that problem." I think that's the biggest thing I've learned here. I feel like it's Christmas every day, right?

Because on my brand, we couldn't afford to have these types of people on the payroll and right now, you know, it's like, "Hi, can I get a sales analyst?" Hi, how about no, right? So, right right every every moment every penny counts. So, having this team that can create things and me having this idea from my experience is something definitely that I've learned. Like um like I said, I was super excited cuz I was like a little kid in a candy store. I was like, "I can create that, Jen, or I can do that." And to see them do it and do it right and do it well is super exciting. It's super exciting cuz I as a brand, you know, I still think as a brand and always probably will.

Um it's exciting to see that I can offer uh affordable services to people um and my fellow brands out there, right? And I get it. I get their pain point. I think I've been through every struggle. I've tried and pivoted every idea. Um, so to be able to translate that to the headquarters team and for it to actually execute and work, um, for example, like I just mentioned the inside sales team, um, is something to be excited about.

Yeah, that's great. Cuz I mean, look, this majority of this video or this podcast series or whatever you want to call it, it's going to be like it's going to sound a little bit like a self-promotion thingy, but I don't care because it is. It is a shift. It is The Shift and it is about the people from HQ. So, what you're saying is, and and I could not agree more with you, is look, if you want to grow, HQ is going to help you with that because we're going to cut you cut costs for you pretty much with these professionals that we have in our company. Cuz you know Jen as well as I do, like every single person that HQ hires is a person that has to have cannabis experience in some some matter.

And then also, they have to be a pro in the field of whatever they're going to be doing. So, if it's an AR person that had they had to work in AR previously, if it's uh, if it's an accounting person, they have to work in accounting previously. If it's uh, um, a sales office person, again, they have to have that experience. So, love how we've sort of circled round this entire video and I'm really happy about that. And um, I just want to ask you one last question before we finish.

Uh, do you want to share with the folks what is your favorite food?

You're already going to say it for me, Filip.

Seabass. And also, you're

not a white wine drinker, right?

No, I am not.

Love that. Well, thanks, Jen. It's always a pleasure talking to you, especially in this setting, cuz this is a little bit of a different setting for us. Um but yeah. Really really big pleasure talking to you again uh uh about everything HQ, about everything Jen, and about everything Cannabis. So, thank you very much. And uh see you on the next meeting.

Okay. Bye.

All right. Bye.

---

# The Shift, Ep 2: Systems First, Chaos Never

URL: https://www.tryheadquarters.com/podcast/ep2
Guest: Marco Pizano
Summary: Why durable cannabis operations come from disciplined systems, not heroics. Filip and Marco get in on what separates teams that scale from teams that stall.

Transcript (auto-generated, lightly edited):

Welcome to The Shift, a place where cannabis secrets stop being secrets. A place where we talk real and no BS. Today's guest is one of those people you don't fully understand until you see what he's actually running behind the scenes. The man um behind the largest team at HQ, 30 people to be exact, one structure, one brain, and somehow it works clean. currently leading the staffing department. But before that, he was running service delivery at Proper AI, which tells you everything you need to know about how he thinks systems first, chaos never. If you ever wondered what it takes to actually manage scale, not to talk about it, not pretend it, but run it, track it, and optimize it, this is the guy. Also, quick disclaimer, last name sounds Italian, but don't get confused. It is a trap. Welcome to The Shift, Marco Pizano.

What's up, bro? Thanks for the introduction. Love it.

Quite a little love, Nate. I

I wanted it to be uh you know to be a little bit fun um but also to sort of bring up all of the things that you do and sort of give you a boost as much as I can because obviously you're you're running an excellent job and yeah

everyone knows that. So um

perfect. All right. I'm glad to hear. So okay before we go into anything and uh I sent you a message about this as well. I sent everyone a message about this. was a crazy thing, but we got the reclassification of cannabis to schedule three, which is amazing. So, congratulations to you. Congratulations to me and everyone else in this industry.

Oh, yeah. That is a huge step. I mean, uh great opportunity for um increased margins. I mean it's not again like we all know we're not where we want to go but uh in terms there's a lot of benefits for uh for investing and increasing like deducting some stuff for tax payroll rent etc. So there's some things that they need to apply here and there and but uh a great benefit, a great step. I would say that pretty much for me is that's the big thing. It's a step forward.

I want to I want to hear a little bit about you and I want to know who is Marco Pizano? What what what is Marco Pizano?

Okay. What is Marco Pizano? Who is Marco Pizano? a freaking crazy dude that once upon a time thought about being an accountant. I don't know why. I mean, you can see it like out of hair already.

Uh once upon a time I thought about being an accountant and um and pretty much what I found it was uh there there is so much more of the normal being accountant. So, Marco Pizano became a sigb of trying to learn different things. um where uh I spent some time in at Deloitte. So I got to see different industries and uh and I got like that taste of h this is nice. This is not just uh account debits and credits and numbers and it's it's more it's about decision. It's about strategy. It's about business. It's about advice to the right people. It's about it's about getting to know the whole operation of uh and the whole cycle of company. So, who is Marco Pizano?

Sorry to pick you up. What What did What did pull you into wanting to know more? What do you remember? What was that first thing that from accounting you? So, you you said you were in accounting. You're like all of a sudden your interest started growing and going outside of that like what was do you remember what was that thing that sort of attracted you to go further?

Yeah, 100%. Uh I was auditing Nissan.

Okay. Right. I was audited. I I was like I don't know like 23 24 years old and then just to go through that massive production lines and like different stuff and then we got to the inventory at the end of the year and so I but going through production lines I was like hm this is interesting. I would like uh to be an engineer and know how this freaking machine works. And then when I was audited, I found out that I actually had to go and understand the process, not just the number. So then I walk through production lines and stuff.

So I I tried to ask questions as one of our core values, curiosity.

I was asking everyone I got like so many people like, "Shut the I mean dude, do your job." I'm like, "No, I want to know." So that's the thing. I've I got to see like pretty young huge massive stuff for production that I'm like and how does it work like how this p how do we get this piece the raw material and then how does it converts to something else and where where do you get it and like what are the incoterms on on like how do you manage to like uh the cost the sales the distribution the the everything and because at the end of the my if my brain and I had good uh mates and managers and partners and Deloitte that at the end of the day I always wanted to think about a whole business and not just a piece of it. So once you think about a whole thing if you see accountant is accounting is boring for like 99.99% of the people but when you look at a financial statement and you say like this is these numbers when you start reading it as transactions numbers but then uh do we get profit loss whatever expenses what are we spending on but then you think and you connect the whole transactions and then you start like the business the cycle why are we here what every company what is the final goal for each company

money

so what's the in what's the out why the the the question of why these numbers are moving like this how can we improve these numbers so we can grow we can sell more we can move more etc etc so that's the thing

that's I answer your Yeah. Yeah. Yeah. Yeah. You definitely did. But um that is also interesting because what you just said right there was sort of a culmination of all the things that HQ sort of looks at as its pillars such as as you said like curiosity, interest, wanting to learn more, wanting to understand more, um development and so on and so on. So it you know

Yeah. Yeah. Definitely because I mean at the end of the day like if efficiency is a money saver which is what the reason literally why we're here

that's that totally makes sense but so so and and this is now interesting so if uh do I understand correctly was your last uh work experience prior at HQ you were working at or uh was it at Deloitte or were you working at Proper AI which one

Proper AI

yeah Proper AI it's a company from San Francisco that manages like share services and automations for uh property managers, construction companies across the US and I think Canada uh nowadays.

That's awesome. So, how long were you there though?

I was there for over three years. Uh started as a manager, then senior manager, then VP of delivery.

Awesome. And and so uh how did you get into all of this, Raid? How did that happen

into into share services or

into cannabis specifically? Cannabis and

cannabis. Oh, that's a funny story. I don't know. I don't know if you know this

uh many people will know now. So David

reached out to me a few years ago through LinkedIn and like yeah,

hey what's up? Hey, we're building a team etc. I'm like thank you sir. Uh I mean I was like thank you thank you. Right now I was in the road of building a lot of uh structure leadership at um when I was senior manager and VP at Proper. So that was a time that I had a big challenge there. A mission I do believe I do believe a lot in missions uh uh in terms of what what you do in a company. So I'm like, "Thank you, sir. I appreciate, but for now, I'm doing something important here." So I I'm not going to move.

Then uh I decided to part ways from um from Proper many reasons. It's a great company. I still uh message with the CEO. It's like awesome, dude. Great company. But it um for a certain per period of time we uh I I decided like uh I need to move from there. Uh I did some freelance after and then boom I saw an opportunity in HQ through LinkedIn and I applied and my dear David is like hm interesting now you are interested.

Okay shoot that gives him more leverage now. I mean, back then when when you said no and then now you're looking for a job, if I was David, I'd be like, "Okay, this gives me leverage because I wanted this guy, he didn't want it." And now that he needs it, I'm going to be like, "hm, what can I do?"

Well, think think about David at that moment. I'm like, hm. But but I I mean I'm grateful he he gave me the opportunity and I and I say I I have given uh I have proved myself here and I I given uh to the company growth and stability and so so a few things but I I'm really grateful with David for the opportunity and he made the right call.

Um,

absolutely, absolutely. I remember.

Yeah. I remember when you joined the call, I was uh honestly quite impressed with you. And when he told me um myself,

thank you. Appreciate it. So, when he told me uh what he wanted you uh for in HQ, I was like, "Okay, that makes complete sense." um which which is now a great segue for me to ask you the next round which is what is Marco doing at HQ and this is very important for you uh to answer is because um both internally and generally with the clients that we're working with there there can occasionally be a lot of confusion about what is the difference between the services that we're providing and with staffing was all like a lot of times there's like this very big mysterious question like what is one versus the other is it the same is it different what's going on.

So, who better to ask than you, the guy who's literally running the entire thing? So,

can you tell us a little bit more about staffing in general and how it differs from services?

Oh, yeah, for sure. So, um what am I doing here? I'm doing a combination of uh managing people and client services. Uh there's a few combination recruiting as well supporting and uh and what am I doing with staffing and what is a staffing? So staffing is the support for any type of role or like any oper operational role most of it uh you can you can support in many in everything uh doing staffing what's the difference with services I will give you the example of clients what the clients prefer one client will say like you know what I just need someone whoever to process thousand invoices per That's it for accounts payable for example I need just one person to like whatever or if you do it automatically whatever I need this invoices process so this person this client just cares about the process and the volume doesn't care about whoever does it so that services because we have a backend team uh with Alex that provides that service and I mean this is just one example but services is like huge the staffing It's the client wanted wanting a person uh that to be part of their team. Uh one person a specific person to reach out to for an specific invoice. I want you John Smith to process those thousand of invoices. But if I have any question with any of those thousand invoices, I want to reach out to you, not reach out a point of contact for services, etc., etc. So many clients prefer to have that person kind of like in-house but it's not in-house. It's a staff uh from contractor from our side but it's kind of like part of their team. Uh so this person also is trained and developed by the client and the client feels that confidence that is part of the team. So actually what success looks like for staffing is the client loving as part of their family our staff which has happened actually even in your case dude. So I remember some clients that no I don't want him to leave etc etc and they wanted you so bad. So that's the thing that's a staff. A staff is having that person kind of like in-house but uh you don't the client doesn't have to absorb any social security or hiring etc. We do all the things we do all the fit the right fit and that's the magic also. It's not just filling roles or a process. It's to uh to find the right fit according to the process, according to the culture uh HQ culture and according to client culture and client needs. That's like a different combination of elements which make us different.

Yeah. and and and so that is perfect what you said there because uh pretty much like let's say staffing the way staffing functions is like you would want to have a workforce that we're going to find for you. We would find a perfect match but we would also run all of the sort of um boring slash could be expensive stuff on the background so you don't have to worry about that stuff. We're literally going to get you a perfect person that's going to match whatever you need. They're going to be following your processes.

They're going to be doing whatever you might uh require from them for that particular position, but without the the, you know, the HR stuff, the um uh compensation stuff. All of that stuff is going to be handled by us. You're literally going to get a person and you're going to be having that person do whatever uh needs to be done in that position, right?

Yeah. But like I'm all like data driven, so let me give you a few numbers. many of the uh many of the businesses uh and even more startups or businesses the the percentage of administrative cost sometimes is up to 26%. So dude, how are you going to grow and operate something business if your oper uh operation like operation and expense is that huge 26% for like accounting administrative stuff? It's like it's not it's not a scalable model. So that's a solution. Hey, don't worry. You you don't have to pay that much. you can pay uh up to 30 50 70% less depending on the the seniority of the role but even you can get even one or one person that it's more experience because at the end of the day it's like lower cost but more experience you know.

Yeah. So that's that's and and also so think that's thinking about money and uh to be more scalable for the business

but also you think

okay how do I scale my business if I don't have time

so that's the most important part

at the end of the day you need strategy you need to think you don't like if you're running a business and you're every day or you are it's not your business but you're management of that business and you are like in a daily I need to finish this and I need to finish that. where when are you going to think about strategy grow uh efficiencies etc to be scalable so you need that time that's also a relief from our side that's where we come in and reduce your cost automate your some process improve your process build so that it like doesn't exist in many places and also guess what I give you your time back think about how we improve how to improve, how to grow, how to make more money.

That's the thing. Time is money.

That Yeah, that that really does make sense. I mean, it is a cost-saving thing. Um, you get what you want and uh you also get on top of it your your support, Marco Pizano's support as well of like, oh, we're having issues with this. How can we resolve that? which now gets me to ask my other question regarding staffing and the differences between staffing and services. So, typically like if we're if we're talking services, you know, generally speaking, let's say we have a client, they're going to come in, they're going to be like, you know what, we need someone to do AR. We have zero processes. We have nothing. We don't have any tools. You build everything out. You create everything and and we're going to just, you know, have you do all of it, right?

So, with staffing, it's a little bit different, right? you would go in and you would provide to people most of the time they would have their already defined processes right or how does that work?

Uh no

no but or or the process is in place but really broken or wrong. And and let me say you this this is super important and this is part of every time I interview someone I tell them this

the most dangerous phrase in any language is we always done it this way.

That's the most dangerous phrase everywhere. Why? Because okay you could have a process you can have a broken process you can have no process at all. where we come up is we need to either create a process or improve the process or even question the process that is in place. And I gladly say that and and this is like really awesome. uh we have people that have improved in so many ways and so many processes uh across like many clients and could be something like really really small and really I I I must say like sounds stupid but it's like so like so much impact and I give you one example quick example think about a process that uh step of accounts payable that used to take 70 hours per month because you need to confirm. Okay. Uh I have to pay this invoice. But do we receive the goods or not? Uh we need to confirm. So that's with another team. So let's go and let's that but the other team there was a third party that in enters the invoice. So clock is running and but you need to verify.

Do you follow me?

Yeah.

Simple simple process. Okay. So the back and forth of verifying that it it used to take 70 hours per month. So one of our uh awesome girls just said like hey why don't we tell the third party that is like inputting the invoices wait for one week and we will reduce over 50% 60% of the uh of the reconciliation back and forth. It sounds it sounds like pretty simple and like so the manager of the client was like okay let's try boom 70 hours saved in one month.

Wow that's that's a lot

and that's a small thing. Another example uh and you know this girl Laa Control

uh she became a team lead but becoming a team lead comes with challenges because you have a lot of responsibility but also you have also hands on deck you know so she was like like not enough time I'm doing a lot of overtime like this is so this girl that is it's not like engineer finance it just like hey let's let's ask ChatGPT, let's use Replit boom she just made an automation for cash application that is awesome and you will see it pretty soon because this this is going to be uh applying for another clients as well

why because she's like

I cannot hold this anymore like there's too much volume too much I need to automate something and and you know we have team that develops engineers and so HQ and [ __ ] Ah, let me try it. Let me do boom, boom, boom. There you go. She just herself.

I love that.

Yeah. So, so anyway, the answer is uh staff or the comment is staff is not just about filling a role. Staff is finding the right person that could give you a big impact, not just doing one task, improving the process, automating. Uh there's a lot of automation, small automations, huge automation that could be done. You can do an automation with Excel.

Uh you can you can build something with an appcript in a Google sheet and and save you 10 hours per week.

So it's and you you just need to ask ChatGPT and then like perhaps use Replit or some thous tons of other tools. So we need those type of person there that can take a look at your process and say hey we can do it better or um this is wrong we need to it's not like we can do it it's like we cannot continue doing this because it's wrong because of our financial standard because of the time that is spent because of whatever again not it's the the dangerous phrase.

Uh, we always done it that way. This way is the most dangerous phrase in any dimension.

Yeah, that's that's exactly what I wanted to ask you because, you know, going back to that phrase, when you say something like that, you're literally limiting innovation at any point in in future, right?

Because you're you're putting a a you know, full stop to to whatever conversation. And now my my question to that would be and I'm assuming you probably came across some of these uh while working here but have you had situations where you're like you know what guys this is something that is a bad process it has to improve it has to be changed. It has to be altered. We need to create a fully new one. And you hear on the other side you hear no we're not doing it. How do you cope with that?

How do you handle that? And how do you manage to pull it off on your um on your goal which is ultimately to improve everything?

Patience and I would say patience is not my last name but you need to develop

patience is patience in cannabis. Are you sure?

I mean honestly dude again look at my head but no it has happened. Um so what how to do it and accomplish is patience step by step. There will be um resistance. Uh there will be people that actually get mad. There will people that also could be afraid of losing their job.

Uh and there could be nasty nasty comments as well. So you need to be patient and you need to be consistent and you need to be resilient on the idea.

There is this a little bit of a paranoia when it comes to the industry about change generally speaking especially if we're talking tech. Why is that?

Well, I can tell you like a list of different stuff and and at the end it's a combination. So one of them is some management is not actually uh in the cannabis culture. It's just

manager uh it's just an engineer. It's just a most of them are but I have found in many clients that they're not into the cannabis culture. So that's one. The other part could be uh the the uh the actually the part of no this is the system that I has always worked for me and I don't want anything different. So that's like this has worked for me and I don't want nothing different. That that is the other part but I would say gladly uh not that many cases like that. uh many of the cases and and I appreciate I am really grateful for that many of the clients that I support are people super open for automations for improvements but most of them that's that's the beauty so far of my job I love my clients but uh

no no seriously because they they are open for suggestions and they are like some of them are really challenging like hey but it's like super micro detail and I love it. But let's go. Let's do it.

That's awesome. And one of the other things which is again very important and and this is a little bit of internal information but every single person that is your report like they really like work. They love you. They they really trust you and they feel safe with you which is not something you can say for a lot of managers because a lot of managers are just managing. they're not leading, they're not being supportive.

And I think that this is one of the strengths that you have which sort of defers you from the rest of the bunch. Um, which I'm

really happy to hear. Why why that?

No, no, no, no, no, no. Because I I one thing and and this is something that I always tell everybody. Uh, I'm not the boss, you know. I'm a I'm a teammate. That's that's the first rule. And you know it like we have worked a lot together.

We are teammates.

I'm not this superior. I have different responsibility and I need to and I to be and I am I'm hold accountable for many things. But the first rule is like the wins are yours. The trouble are mine. So

like I need I need you. I'm I have your back. Please dude have mine. And the way that you have my back is doing a great job. That's one thing. The other part is I'm old, dude. I mean, well, not that old, but I can say

No, I'm not that old, but um but but I had I have had so many hard situations in my uh professional life that my like the lessons that I learned it was what are you doing, dude? Uh you're spending 8 hours, 10 hours per day working. That's your life, you know, and I need to enjoy my time. And how am I freaking going to enjoy my time if I don't get along with people? So, I don't I'm not a believer of the uh we are here just for work and like I don't make friends at work and I'm like I I mean I don't know.

I I cannot say that it's right or wrong. I can say that it doesn't fit with me. Why? Because I still have a lot of friends from previous companies. A lot.

I mean, I still call them. I still hang out with them. I still travel with them. Why? Because you spend your life at work. That's the real thing. So, why the heck do I have to be a robot? No. And the other part is um whoever I'm I'm the is part of the team. I am usually and you know me that like I'm I don't go around and I'm I'm pretty straightforward dude. So, but now I I I care about building community. I care about like the people I'm and and I guess also it's part of my education, you know, like I was educated that way.

How hard it is to build a community and to lead a team that is fully remote. Because what people might not know about HQ is that we're a fully remote company. Like we don't have, you know, obligatory office hours or something like that. Like we literally everyone works remotely. Occasionally we meet each other if you know we're traveling and stuff like that, if we're having events in the industry, whatever. But we're a fully remote company. And like for someone that like is looking from from the side, especially like after COVID where everyone tried to see if remote work is going to work, all of a sudden everyone's returning back to this like sort of either hybrid model or like office model and we're like we're just fully remote and it's I'm going to say it's working for us, but how hard it is for us to get to the part where we say it is working for us.

where um I can tell you what works for me. Um I don't know like it if it is the right way of doing it or not but

what it works for me starts and we has I I think we have spoken about this before starts with uh the face of recruiting. Why do you care when you are uh hiring somebody? because I can find a candidate that is like a super genius but doesn't have that cultural fit, doesn't have that attitude. We have that vibe, you know,

we we have that vibe. So, we need

it's not like I want someone exactly like me. No, never. I mean, I don't want copies,

but I do want a cultural fit. I I rather to have someone hungry with good attitude that have a super genius. Why? Because I can work with the the person I can train. I can support and I can learn from that person. Uh with a super genius that it's like uh the the the last coke in the stadium. It's thank you sir but we are a team here you know.

So, so the first thing how do we manage and how we build community from the beginning from uh from the day that I called you and hey nice to meet you we're HQ who are you

that's the first thing second thing when when you enter you need uh I I like to like uh set up the tone in terms of the community in terms of we are team support how are you etc. It's like a constant communication that last year I did a bit uh it was challenging for me but um it's constant communication a lot of communication uh setting the metrics clear the the more like the more clearly you are you will not give give everybody step one two three of the whole process or everything that they're going to do because we need to be flexible and everything changes from one day to another. That's the real stuff. But we need to be real about it, you know. We need to set up the tone of we this might this is this is what you're gonna do today. Something might change tomorrow.

But we need to be like we need to say it straight and but we always need to care about uh timeliness uh responsiveness and accuracy metrics data etc. So it's from day one and constantly. I'm one person that uh has a lot of communication. I don't micromanage. I'm not a believer of micromanagement at all. I think that actually uh makes things going slower and perhaps like no I'm not a micromanager but I do care about knowing almost everything in terms of operation visual what is happening what what is everybody doing how everybody's doing um I have a contact with the clients what are you doing I want to know about how the client is I'm not going to know everything But I need to know uh some of and like communication, communication, communication.

One quick thing when I was in automotive industry, I spoke with a worldwide CEO of one of them. And it was funny because I was just having a smoke and then this guy CEO comes alone to this area where we were smoking when I was smoking. I'm like the CEO why can I why do I ask him you know because it was the this big thing in Japan

I'm like what has been like so many years as CEO what has been your biggest challenge and it goes pretty straight like communication that's the biggest challenge everywhere communication so that took into my head and it's like okay it's not about just improving and it's not about just efficiency it's It's communication how you build communication, how you communicate effectively, how etc. So, and sometimes you need to be repetitive in terms together. Yeah, I send a message a message and that's it. Dude, give a call, dude. Slack, dude. No, I sent the email like two days ago. So, what your goal is to like have an interaction, a communication, so look for it. You know, stupid thing, but for me, communication is one big deal.

But that's very well said. You want interaction. You don't want a one-way street. It doesn't make any sense.

Pick up the phone.

Pick up the phone. Yeah. Now, Marco, you've worked, and as far as I know, you've worked with manufacturers, you worked with brands, you're working with distributors, retailers. You're the person that's sort of everywhere a little bit, right? You might be the right person to ask about what what can we expect next in the industry. Do you catch a vibe when communicating with all of these guys?

You know what has been confusing? But yeah, I can I can answer my perspective

uh from what I've seen in the clients and what I have uh seen. So you see a lot of things in the news, the changes, schedule 3. Um, so there's there's a lot of investments coming up. There's a lot of big names coming up. Uh, companies from Canada that are growing in the US as well. Um, but it's there's a lot of challenge uh in terms of cash.

So what do I see? I see an industry growing this year. uh better than last year. Last year was kind of like an inflection point or like tough uh I don't know uh it was weird but this year I see a bit of growth but also a challenge of uh how are you going to manage your cash? Cash it's always been the king. So so times up. So whoever manage better the cash and it's not about to hold the cash it's about interact with the cash you need to move the cash you need to pay but you need to receive you need to do the whole transaction to make this uh whole cycle alive so whoever manages better their cash um I think is is going to be tough

and and whoever doesn't

uh will most likely disappear.

That's that's that's a very good point. Do you think now based on what you said, do you think that maybe a lot of businesses might now given that there is this very big opportunity? Do you feel like some businesses might be having issues ex or sca scaling let's say because they were not prepared or do you think that the better sort of or more often more frequent situation might be that these businesses have been waiting for this for so long that they've been preparing for it and that now they're going to be scaling fullon without any errors. What do you think is the more likely one?

Uh

let me put it this way. What I have seen is that many people is like um or many businessmen try to hold into I I've done it this way some cases.

Okay. Okay. Okay. I see where you go.

Yeah. So at the end of the day uh like yeah I don't care about this and I don't care. Let me let me put it this way as well. Finance is boring. accounting is boring when you start reading the financial statement and see like hey these transactions did and there and there. So you need you need people to read and not just thinking about uh a like a margin of profit. You think you need to think about how can I reduce my cost? How can I improve efficiency in opics? How can I sell more? How can I make a distribution more efficient? Uh how like you need those type of questions and you need to know where uh your transactions move and where uh according to the market according to the numbers of the market as well. So you need a combination of things. So short answer is you need you need to educate yourself in terms of uh the information and the transaction you do in order to make better decisions moving forward and how are you going to do it? Um

let loose man people just need to let loose and they have to be less paranoid and I think less stubborn and less ego driven. It's a lot now

less It is. That's pretty much it. Like just let go of the ego, let go of stubbornness, and

feel free to listen a little bit more. And when you start listening, you're going to you're going to sort of differentiate the actual noise from a melody and you'll be able to understand which one is what and where you focus your attention to.

Yeah.

Awesome. Look, I this was a very interesting conversation and I loved it. Uh and uh I feel like we we're just at the the beginning of a bunch of other things that we can go through because

um

you're an extremely interesting person, but I obviously this not the last time. We're going to be talking a lot more in the future.

Funny because I

Funny I had a podcast for several years.

Oh, really? About what?

Oh, about everything. But most of it about uh music, cinema, and some politics like but fun stuff, you know.

Love that. That's Oh, perfect.

So, you're you're kind of this is your ter territory. You're not

as I I I did some actually commercials for I work for a radio station as well. So,

awesome. That's great. Did not know that. So, see how interesting you are, man. We're definitely going to have more of these conversations in the future, but I appreciate your time today. really. I do think that um whoever jumps in to watch this one, they're definitely going to learn a lot more about uh a bunch of things uh that you do right now and that um HQ is doing with you as well, but they might also learn a couple of things about industry and about um these different types of individuals and companies that um there are in the states and you know some some other countries as well. So, thank you so very much. Appreciate you once again. Have a great rest of the day and we will chat soon. Marco

---

# The Shift, Ep 3: Inside Cannabis Sales Ops

URL: https://www.tryheadquarters.com/podcast/ep3
Guest: Dusan Markovic
Summary: How modern cannabis sales teams really operate — order entry, inside sales, account coverage, and the data behind every closed deal.

Transcript (auto-generated, lightly edited):

Welcome to The Shift, a show where we talk all about cannabis and business. Now, today's guest is a very peculiar individual, a person that runs a legion of people in his apartment, a person that knows sales, but interestingly enough does not sell, a person that operates within sales, an ex basketball player, frequent traveler, and a guy you go to in order to save your sales guys money. But we will talk about all that in a second. Please welcome Dusan Markovic.

What an intro. Wow.

Right.

Yeah. I actually got a fact check you. I didn't play basketball.

You did not?

No, I played tennis.

Why was I under the impression you play basketball?

Yeah, I love basketball. I mean, I played basketball as a junior, but not really professionally or semi-professionally.

Do you remember when you and I actually first met uh in person? I said to you, you're extremely tall. Did you ever play volleyball or basketball? You said you played basketball.

Yeah, I played basketball, but didn't you know, I didn't play played professionally, but you know,

you ruined my intro. Doesn't matter. Um,

it's all good. It's all good.

But that's that's great. That's a great intro. Let's start off with um you and sales. So where did that start? Where did you obtain your understanding of sales and how sales work?

So before I came to headquarters, I was actually working in sales for about five five and a half years. Interestingly enough, it was a Canadian internet service provider and it was a small team but I came as a junior back then just learned the ropes started doing sales grew kept going to like a meteor senior and then eventually a team lead and uh ended my career there after 5 years came to headquarters and funnily enough that's a great story uh how how I met our CEO David and uh the whole headquarters opportunity. I drove for 4 hours from my city to Belgrade to meet David and surprisingly I was met by 10 different department heads that interviewed me at the same time and it was a it was a funny and eye opening experience actually and uh got a call a few days later and we're here since and this

Wait, so so you you drove from Niš to Belgrade to for the interview with him.

Yeah. Yeah.

I I passed everything like I I So I I spoke to him online and I was like, oh, nailed this interview. About to get a job. 3 days later. Oh, can you come meet me in person? I'm like, wait, I didn't get a job yet.

Sure, let's let's go. I'll I'll do it. And yeah, met met him and uh well, everyone from headquarters at this point there. Uh, and that went great. Uh, got a call back a few days later, got the job, and my journey here started, and it's it's been an eventful one to say the least.

But that's that that sounds so much like David. I'm not surprised.

Yo, but honestly, life-changing. that that whole experience just puts things into perspective for me like where I was and where I am today and how higher level things were. I to I thought I knew sales and I thought I knew the business and then saw these people in person like challenged me on a completely different level than I was challenged before and I felt so small at that point. I was like,

"Yeah,

we don't belong here." And then, you know, now as things stands, things are great. As you know, obviously,

obviously, yeah, we're we're running it. But it's it's actually very interesting what you said there cuz like I was sort of under the same impression as well when I met David and when I when I actually started working with HQ because it's not cuz I I've had some uh previous experiences with startups. I had some previous experiences with corporations and this one was like sort of a mix of both and you're you know it's it's very interesting how you have to juggle between the two to to actually reach the goals that you want to reach.

So

really does make a lot of sense. Um but so let me revert back to the sales uh experience previously. So five years you were selling internet provider contracts or how how did that work? Yeah. So I sold everything from like internet service to like internet equipment and it was mostly residential. There was also some commercial sales but I was mostly in the residential area and like it was rural Ontario. So you got to understand there wasn't like highspeed internet back then. That was like 8 years ago at this point.

Wasn't highspeed internet everywhere. Starlink still wasn't established. So

uh it was just a struggle for you know

hardworking people that had money to find reliable internet. So I figured out you know how to sell it, how to approach the clients and how to hit my targets essentially. But what was interesting to me at that point that I didn't know was how connected the problems that I had back then were the problems that sales teams are facing in cannabis. And it's surprising that like when you walk into like a sales industry for a bigger company, you will have a defined role which is, you know, just going to hit the road or hit the phones, call and close, and that's it. you're hitting your targets, you're getting paid. But with me back then, I was doing sales and post sales. So once I make a sale, I'm like drafting up a contract, organizing the installers or like the people who are going to install the equipment. So like I'm the one navigating the logistics behind it. And I noticed the same thing in cannabis, too. It's like people would like make a sale, be on the road for 8 hours a day, then come back home, submit orders online for like 3 hours. And I'm like, what are you guys doing? So that's that was an interesting parallel that that we are now solving basically. That's that's actually a great segue to what I wanted to talk to you about next, which is what are the differences and similarities between what you were selling before and now as someone who's really attached to this like selling process with other uh brands is like what is what are the major let's start with the major difference and then we can we can look at the similarities uh when it comes to selling in cannabis versus uh your previous experience. Yeah, obviously.

Well, cannabis is just the major difference because things are just not consistent. And I noticed like the brands that are on top are consistent and they have consistent products, consistent strains, consistent percentages. And like coming from other industries, you know, you're selling the same thing. So, the pitch is the same, the motions are the same. And here like one month you might have like a blue dream, you know, flower that's like 32% THC and then the next batch is like 24.

So it's a completely, you know, there's a lot of inconsistencies that you do not anticipate. And also what I noticed is people in cannabis are way leaner. The companies are just trying to save as much as possible and everyone is wearing multiple hats. So that can be a blessing in a startup. But if if you're scaling, that's a problem. And as you know, like in our business, all of our clients want to grow and want to scale, but they're facing this fundamental problems where, you know, you have a salesperson who's also an analyst who's also an admin. Uh so that can't be good. I mean, sure, there's, you know, exceptions to the rule. there's probably some superstar people that don't even know how how good they are, but most of the time it just creates chaos and inconsistencies. So, that's like the biggest uh thing that I noticed.

Yeah, it it's it sort of sounds like there's there's um there's a lack of definition between the roles, which is understandable given that, you know, the market is also sort of kind of young if you compare it to other markets and under other industries as well. But like on top of that, like we're not talking about a fed a federally regulated market. So it's very different from state to state and there's like all a lot of a lot of these differences that you have to get adjusted to. But uh um but it does make sense. Now, so and this is interesting because I'm just going to say it and I'm pretty sure a lot of people will agree with me, but you are killing what you're doing.

like you're really good at your job and that's like sort of a well-known fact between everyone you and I know but also between some of the clients that you're working with as well.

And um when you were talking a little bit earlier about that whole process when you were selling before at that internet company and you say like oh when I finish the sale or the sale I have to go and do do a bunch of back office work and and logistics make sure everything is executed yada yada yada. So what I'm what I want to hear from you is was that a contribution to how successful you are at the moment right now with what you do and smitch a little bit of um of a teaser of what you do specifically.

Yeah, a thousand% actually. Now when I turn back the clock when I used to be doing that I was so annoyed because all I wanted to do is sell. Like I I used to tell my previous mentor is like listen just give me the leads put me in the position where I can succeed the most. I know I can outsell almost everyone here but I was just so annoyed with all the back office work I had to do. But that then right now that like enabled everything that I'm doing today because it taught me like how to be accountable, how to like be consistent and also multitask at the same time because you know cannabis is very chaotic and like things happen in a snap. Like you would be doing you know a a job today and then tomorrow that job might completely change. you would be using a process for 2 weeks or 3 months and then all of the sudden, hey, here's this new AI tool that can completely revamp this process and it can automate it completely and then you're like, aha, let me get on that. So doing all of the admin work and like doing the repetitive stuff over and over again helped me tremendously like adapt to cannabis and sales operations in general because when I came here I didn't know what exactly we did as a team but then as I dived into the weeds I was like wait a minute I was kind of doing this back in my job except you know it wasn't in focus it was just in the back end so it was way easier for me and And as we started growing and growing, I was able to like put all of those lessons in motion and kind of make sure I'm organized and I'm staying on top of everything.

Great. And that makes a lot of sense. So So if give me your elevator pitch. So what what is what is your job? What do you do?

Tell me in a in a quick one. Well, I like I like telling people to sum everything up because I can go in elaborate detail, but basically what I do and what my team does is we just help sales people do what they do best, which is sell. And the way we do this is exactly what I hated doing before. Like I just take a give them back their time. That's like the number one thing. So focus on your work. focus on doing what you're getting paid to do and what you want to do. And we'll do everything else in the back end. Whether that's order management, menu creation, uh CRM, uh management and updates, all of the tedious things that they hate doing, we love doing and we are very good at that. Uh so that's the elevator pitch. I can go deeper. Uh but basically just enabling them and buying them time.

But but that's that's that's crazy because like you just and that's interesting because again it sort of intertwines and it connects but you said before like when you were working in that internet company said like you know I wanted to sell I don't want to do all this back office stuff and now knowing what that struggle is as someone that knows how to sell. You're like I just just give me the leads. let me handle everything there and then you do all the other stuff that I don't want to be bothered with which is which is awesome.

Um uh but yeah I look feel free if you want to go in in more detail if if there's something that you like to say specifically about what you're doing go for it and then um I'll probably follow up with some extra questions um if you want to.

Sure. I mean, the the premise of our job is simple at first, but then as you get deeper, it's way more layered and way more complicated. That's why we're sometimes used to have issues recruiting and finding the right talent. But I'll talk on that a little bit later. But basically, a sales hypothetically, so a sales rep would close down an order. They would call or email our team, hey, here's the order. Can you please get it into the systems? And then invoices in invoice it back to us,

right? But the complications and the problems often come from like inventory. Like they would sell something that's out of stock, low stock. And then we got to figure out the logistics behind that because obviously everyone wants to save revenue, right? Like if you make an order for 10K and you can only fulfill 8,000, where is the 2K coming from? You know, so that's where we come in. We're able to make smart substitutions like note out of stocks like figure out figure out what the brand wants and then what the retailer wants. We give them those notes you know on our hand and in our own SOPs. So we are able to like on the fly make those decisions

and uh save the revenue and also as I said like save time for the people doing that work. Yeah, that's that's actually a fantastic thing that you've mentioned there is and it's because and I'm looking at from from the perspective of other departments that HQ is doing as well is like we communicate with all sides and um you know whatever services that we do have they're communicating and working with both brands, distributors, uh manufacturers, resellers, retailers, literally everyone. And we sort of get the pictures from all them. know what their goals are and we can use that to our advantage to make sure that whatever service we're delivering, we're delivering at a good quality, but also making sure that all the parties are equally satisfied and and that sort of translates uh to to you as well and what you do because obviously as you've been growing, it sort of goes to show that you as someone who does communicate with all these guys, you really know what they want and what they need and like give them

um and and make sure that satisfied.

That's that's super important and actually an unsung hero of all of this that I've done is like proper communication with sales reps directly. Of course, everyone wants to talk on a high level, you know, with decision makers and CEOs, but having great, you know, understanding and trust between sales rep is super crucial because you're dealing with their revenue and they need to know that you're on the same page as them and you will do no harm to them. And coming from sales, sales people are superstitious.

salespeople do not trust anyone, do not want change and do not want to evolve. So, uh us having to like thread that path correctly and communicate effectively helps everyone win-win because if like they want to trust us, they just, you know, don't know it yet and we obviously want to help them with their work. So, building that relationship is super crucial.

Yeah, that that definitely does make sense. So, and you know, taking all this into consideration, when you look at all of the HQ services, sales ops is one of the most popular ones. I think it's not the most popular one. So,

what does it make so popular? What is actually So, when you're talking to the stakeholders on a brand side, right, what is the thing that you see like, oh, this is what sort of ticks in their head and and that's why they get interested. this is why they want to come here. Why what does it make so what does it make sales ops so popular in HQ? That's a good question and I think it just easy to connect the dots for higherups in a sense of hey let's give your sales people more time because they can make more money because that's how they talk like everyone wants to generate more revenue and I've heard this before uh from one of our partners was like hey before you guys came in they were super unhappy like they did their job but they were like one guy almost quit on me uh we had to fire another person to bring a fresher person on board because they were just working 10 hours a day and half of those hours were like doing admin tasks. So I think it's easy to make the connection between uh us you know stepping in on a support side of things and then them going out more and generating more revenue and also saving time and making them happier because unfortunately for you know 70% of the people not in sales sales people bring the money I wish it was like more equal uh but people will listen to sales teams so us coming in and building those relationships is super impactful and also very easy to integrate. We don't require a lot of training. We don't require any SOPs. Uh we're we on board within a week even less within days. So it's super seamless uh for us to come in and start doing that work. So that's I think what's a big benefit for us.

Yeah. And and also like you yourself know if you're a dissatisfied salesperson, you obviously know what's the difference of how you're going to be selling and how successful you're selling if you're dissatisfied versus if you're satisfied.

Uh and and what let's not even go there if you have all of your time reserved exclusively for you literally going out and pitching to people and selling product or whatever it is. So that does make uh a whole lot of sense. Now, um I so before this podcast obviously I reached out to you. I was like look I and and I was really passionate about this because it's a very good sort of case study/example of why sales ops is an extremely important service and and a you know a a good solution for different types of brands. Um, so I've asked you like what can we do? What can we share about this one specific brand which we're not going to name at the moment right now, but give us a little bit of a clue of, you know, how big they are, who they are, and and tell me about this success story um with this client.

The brand that we're talking about is top two MSOs in the business. They're one of the biggest players in cannabis and we've been working with them for I would say about two years now but for a year we work with them in a much smaller capacity. So we supported them in three different states and those were the smallest states in terms of like output and volume. And then I mean we were obviously doing a good job. Uh and this was before I became a manager of this team. And then once he became manager we started talking about potentially expanding with them and no one understood the scope because my team

was not running on high volume to that extent. like we were just doing a good job with a lot of clients, very efficient uh but smaller uh and then this opportunity presented uh itself to us. They wanted to expand from three states to eight states and that those includes like their biggest hitting states and our volume and output quadrupled in 3 months. So, we went from like I don't know like 500 orders a month back then to today three three and a half uh thousand orders a month. Our team tripled uh in the last year. So, we went from like five uh sales ops people to now 17. But what's interesting there is like our efficiency increased because our output went from 500 to 3,000 and our team just tripled. So,

that's what I say. It seems like it was it's actually a a money saver on top of a money saver pretty much because you save money by having the service and now all of a sudden you're expanding with other states. You're saving the money on saving the money with having less of required individuals to do this job but having as you said quadruple the number of orders um that they're um asking you to do for them. So that's that's that's amazing. Yeah, it's really really a testament to like how hard the team works and just headquarters in general. Like every again I will always be a preacher for the people. Uh I love working with people like putting people in the right positions to succeed and this whole experience in the last year has been you know life-changing in that regard. just hiring the right talent and then training and onboarding correctly.

Uh just setting processes in place. I mean obviously if things stay the same from before that deal to today it wouldn't be possible but we had to like strip the whole process naked basically and just build it from the beginning like make sure all of the SOPs are in place and followed build checklist. uh build accountability within each person on my team and then you know lead by example also I mean when those things are happening I was working actively with all of our clients back then so I was able to like coach people and mentor and take them with me show them how I think how you know anyone with more experience should think and now today I mean we have two team leads within my team when I joined uh and I became a manager I was doing the work alone now we are lucky enough to have promoted from within that people stepped up and now are leading these teams but it's been a great collaborative effort. Of course, you know, I I don't want to sound cliche that, you know, I'm no one without my team. I mean, it's kind of true, but also it just everyone worked hard and I helped build this processes that today we're scaling with other clients as well and we built a blueprint that now is so easily replicable. Uh it's insane. Uh and yeah, sorry I went on a tangent. I'm just very passionate about these topics

and you should be because again it is a very huge success story. But also what I really love at what you said there and I think we're I both of us are coming from the same place is that the the way that HQ differs from maybe some other companies in terms of hiring is that and as you said like I don't want to sound cliche but what we do is we really try and focus on finding the right people for the job. And when I say the right people for the job and I'm not not thinking about like you have this degree or you have just this experience or blah blah blah. I'm saying of like literally trying to understand what that person wants to do, where do you fit perfectly so that they're going to be satisfied with what they're doing, but also that the delivery um is going to be at a level that no one can beat, right? And I think that the reason why they're doing their job so well cuz like what we don't even have like a turnover of people.

It's like whoever it's like people are extremely valuable and the backgrounds that we have at our company are like are do you want to do um I don't know whatever accounting you have to know accounting but you also have to have cannabis experience

cuz without like that's sort of the way that we go about hiring people is like you have to be within both of these scopes otherwise it's very hard for for it to work cuz if you're not in the cannabis industry, you're not going to be used to this dynamic surrounding that's like constantly changing as you said yourself but also we need the expertise of

I agree and also like I don't know how how what your experience is with other teams but I I always set myself up up for failure uh on purpose with like recruitment for example I always tell them hey guys like this is not for everyone like you need to be able to multitask and like pivot Because like being able to pivot in this industry is like the number one skill and I will never not say that just because you never know what you have and then it's gone tomorrow. Like you need to be able to have a plan B and a plan C and a plan D and like just being able to constantly be able to like, you know, task switch and go from one place to the other.

That's like super crucial. And some people are not cut out for that. And you have a Frenchie there.

This is my sister's dog. This is not my dog and she's uber uh attention seeking so I I do apologize. She's just I think

that's cool.

I think mine's sleeping next to me. So that's that's great.

Come on. Come on.

But it's my sister's dog. I I this is not

Sorry for getting dog. Go.

You're good. Don't worry.

Um

yeah,

that's Yeah. Uh we're on the same page there. And I think this is extremely important. Not, and I'm not talking just about cannabis industry. I'm talking general. If you want your business to run good, your people need to be happy with what they're doing. Um, and that does not include, you know, just like having quality compensation. They have to be valued and cherished and appreciated, but at the very top understood as individuals and where they fit. Um, which is which is again the reason why we're so successful as well. Um, now We talked a little bit about like sort of hiring people and sort of like going into the past, but what I'm interested right now is what what it when you look at the industry right now, when you look at what you're doing, what are the problems that you're facing in sales operations or what you anticipate might be a problem in the future that you're looking for a solution right now?

That's that's a good question and also a broad question. and I'll try to answer it from from my perspective. It's like I mean you know this uh but everyone's facing cash problems right now like it's tight. People are trying to get creative and smart in terms of savings and obviously that's not great for business but we also have to be creative and figure out solution to solutions to problems that our clients may have and also anticipate solutions to the problems you're going to have tomorrow.

So uh right now in terms of like sales ops what we've done historically our work is very reactive. So we would be hey here's the deal I closed here's the order get it into the system and we execute so fast but like that's the root problem is it's very reactive. So my goal over the last like year and I've talked about this with you you know Jen you know Adam we've been talking about this for a while is like how can we do the job that we're so good at but be more proactive about it and right now what we launched recently is inside sales which is the more creative approach of order management or order entry however you want to call it is like utilizing the POS data and the data that's out there in the ether whether you know our clients are sending to us or we're scraping through Hoodie or Headset uh realizing like what's in stock generating those reports and then us doing that work proactively hey here's here's an order a sales rep didn't have to call us to trigger it would think that this is what you should order based on the sell through data and based on all the reports so everyone can get a win-win because how sales works in the old world is you know sales people would be so hungry and greedy for their cut, they would oversell very aggressively. And that's fine for the sales rep. He's going to get commission.

But then brands and stores can get into potential problem with, hey, your product is sitting on the shelf for 7 months. You need to credit us. We can sell this. So they're going to be like AR, we're going to be paying you like

Yeah. Right. Exactly. Pulls and pushes and creates this ginormous issue for a lot of different um departments, teams, individuals and so on and so on. So I completely get what you're saying. Yeah,

I I agree a thousand% and you guys are doing a lot of like your team is doing a lot of the work. Exactly. Because of those issues. So now we are being more strategic with with that work and just always ensuring that the product is shelf the appropriate amount of time. I mean that's like in discussion with the client of course maybe they want to be on the shelves for a week for two weeks maybe the order should be once every month once bi-weekly. So based on those conversations we do the work in the back end generate those reports make an order and everyone's winning because

the shops will order more frequently. maybe not as high amounts as they were before, but you're going to get frequent income and they're going to pay it on time more often than not because they're not going to have uh overstock product. The product is going to keep flowing and moving and then you can work on that relationship in terms of AR. It's going to be, hey, you guys owe us XYZ,

but look, we're constantly, you know, supporting you with the right amount of product so that relationship can be mended. So, this is something that we are currently working on and developing. We currently have a couple of clients that we're doing this work with. And then maybe tomorrow, well, I might save this in in my pocket, but right now problems, cash problem, and us being more proactive about our work.

Okay, got it. Makes sense. So, and and now let me just retract a little bit with with the inside sales things. Uh would can you would you say that inside sales is like this new improved modernized version of order entry? Would you say that? Maybe

I would well I would not frame it like that but I would just say it's the big cousin of order entry just because they are adjacent like you you can't do one without the other because the good thing about headquarters and our services right now is if you're getting inside sales from us you're also getting order entry in the package so we do both. You don't need to like worry about having to do admin work yourself.

It's just like basically a Pokemon evolution of order entry is today.

Yeah.

Comparison though. Love it. Love it. That's great.

Okay. Awesome. So let me and this was this was extremely helpful for for me to understand what you do even more than um how I do understand it right now but also for whoever going to be watching this they're going to have a better understanding of what sales ops is and order entry is and what you do but let me generalize it a little bit and ask you and this is something I'm asking everyone because I I want to genuinely understand and hear what people see in the air and what they feel in the air and that is Where is the cannabis industry going?

What do you see for the cannabis industry in the next period? Let's say a year or two years from now.

I'm hoping it goes federal because it's been a blood I mean you know this. It's been a blood bath lately. Uh markets are way oversaturated at least like the top markets. Like we we had an exodus from California for a while uh with my department. uh we weren't in California for like a year even though like in the past we were and now we're back and what we are seeing right now is a complete parallel of what was happening like even 2 years ago but 3 four years ago it was way different but it just margins are super thin it's oversaturated like the competition is huge

and everyone is just bleeding money and I mean for the sake of the industry

I think I mean I think we're headed there I don't know how soon it's going going to be, but it needs to go federal. Uh because there's so many smart and creative people in this industry and like the brands that we all root for and support, but a lot of brands are going out of business as you know, and uh they need help. So hopefully, you know,

the market needs to expand uh and I'm I'm hopeful not just in the states but also in Europe um and uh further um as it is right now. So we're all having our fingers crossed for that one. Um,

I was I was in Germany two weeks ago uh and I was so shocked how much weed presence there is in Cologne Germany. uh it's on level of Chicago and I was shocked because I I know that Germany has uh like it it's gone medical last year but I was not ready for the whole city to stink like cannabis and I mean I enjoy it

recreational as well. You have the lounges now in uh where you can you can literally just like smoke recreationally. But also, let's just I mean, let's just be real. You can literally smoke cannabis wherever you want. And for sure, no one's going to be like, "Oh, shame on your ear. You're going to be arrested or whatever." I don't know, dude. I I know people that got in a lot of trouble uh just like having a joint on Oh, yeah. I I know a guy who got a year and a half in prison, but he cut a deal, but had to pay a crazy fee for just having a joint on him. So, I I I don't know. I don't mess with cannabis here unfortunately. It just

Wow. That's that's a completely different experience from what I I

Yeah, at least South I mean where I am it's just very

So let me just share a little story that I had and it's not me it's Spain. Um and I think it was like maybe a year ago or something.

I was there uh for a sports event, right? And um what happened was obviously you know there's a lot of sports but when uh the sports stuff ends everybody goes to the club goes on drinking mode um and um as you know people that are coming from like um Southeast Europe there's a lot of people that don't have accessibility to cannabis product. So, um, everyone was like, "We want to smoke. We want to smoke. We want a joint. We want cannabis all around." And, um, trust me when I tell you, literally in front of the club of like where we're hanging out, there was a bunch of police officers. Everyone was smoking a joint.

Everyone was like having a or whatever it was. The police guys were just being there with them. No one said a thing. Bear in mind in Spain recreational I don't think it's legal still fullon as it is like in Germany. I think you can like consume a certain amount but like again it it's a very very small amount. It's not like

right

United States right? Uh but and then I asked this girl and was like she's by the way she's from France. I asked her

so like how freely can you smoke here? And she was like you know what no one cares. The only the only situation where you like might be in in a problem is like if you um get pulled over uh if you're driving bad and a cop pulls you over and they see that you're

obviously right

like that that but otherwise just like no one cares anymore.

I mean that's a good thing and that's something I wanted to ask you like I what do you think where is the industry heading? I I'm well hopefully what you said it goes uh federally and that's I think whoever I asked this question the answer is always the same like everyone wants uh cannabis to go fully legal which obviously I'd like as well but what I think is we're going to um I feel like it's going to be even more commercialized it is right now If that happens, and I think that if that really happens, cannabis is going to be like the new energy drink uh industry. It's going to be everywhere. Everyone's going to want it. Everyone's going to be using it.

I mean, that's fair. Sorry, can you please?

No, no. I That's sort of what And I think it's going to be this next main thing, but I also would like for these social media platforms to remove the bans from cannabis because I'm not really sure why they exist anymore. That's like sort sort of crazy. Let us talk about it. Why do you

I know

content that's like so crazy. I really

Well, is getting lobbyed everywhere. So that's that's my only pet peeve is I I agree that if it goes federal and like moves in Europe and everywhere in the world, it's just going to be way way way more commercial. But I'm like the counterargument to that like is that a bad thing? Like I would rather sip a THC seltzer than a beer. Like it's more healthy for you, you know?

Yeah. Yeah. 100. And and again that would be perfect because then in a world where we would thrive. I I would like that for sure.

I agree. I mean we have people in especially our country like every second person is an alcoholic or like uses something else like give them cannabis they'll be happy you know.

Leave it. Leave it. Yeah.

Um but yeah, that was uh this was an amazing time that I spent today with you and I really appreciate you coming over and just spilling out um everything salesy, sales opsy, order entry and so on and so on. So really do appreciate that and I really do hope that um people that might be interested in understanding better what you do will get uh a clearer image as well. So, thank you so much, Dusan Markovic. Uh, a proud tennis player, ex-tennis player, and, uh, an ex basketball player. Uh, appreciate it. Uh, have a great rest of the day, and, uh, we'll see each other in some other meetings.

Thank you for inviting me, Filip. This was this was a great experience. Uh,

did this satisfy your your, uh, your sort of interest to being on a podcast? Oh, I mean we weren't supposed to break the the fourth wall with this. Like never heard of this podcast. I just came to the meeting. You were here. I was surprised.

But yeah, I'm I'm happy to see you thriving. And what what podcast is this? Am I number one? Number two? What is this?

Oh, number two. Okay. Well, many more fruitful podcasts for you in the future. Uh I really enjoy this. And is there something you want to say to the audience? just keep on watching. I I think that uh the the ne I mean including yourself and the previous guests and so on and so on. We we have a lot of awesome individuals in different aspects of the industry that people really really enjoy uh listening to and can learn more about the industry and business and cannabis.

So just stay tuned. That's it.

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# The Shift, Ep 4: Teachable Operators Win

URL: https://www.tryheadquarters.com/podcast/ep4
Guest: Jessica VanDeWalle
Summary: In Episode 4 of The Shift Podcast, Jessica VanDeWalle of Ethos Cannabis breaks down what it really takes to last in our industry.

Transcript (auto-generated, lightly edited):

Ethos is vertically integrated. So, that means you see the cannabis business from cultivation all the way to retail. From your perspective, what's the biggest mistake brands make when trying to scale wholesale relationships?

Yeah, but I think this was one of my favorite questions that you had. Um, you know, from my side, I think the biggest mistake is brands confusing the access with success, if this makes sense. So, they'll scale the distribution faster than they scale the relationships, right? And instead of being organic and and, you know, they're chasing doors instead of being realistic. So, is our product actually moving here once it's there? That's the question. And I think a lot of people forget to ask that because it's more about the sell-in than the sell-through. Um, it's kind of become that environment organically, which is not what we want to see as a wholesaler. So, for us at Ethos, wholesale isn't about being everywhere, right? Like, for us, it's about being effective. I always tell my team that we want to be in the right place at the right time. Um, you know, and in our mind, the brands that win are the ones that are listening to the retailers, supporting the staff in store, and just, you know, adjusting based on what the group performance metrics are um that our partners see.

Makes sense. When you say uh at the right place uh the right time, what does that mean for you?

Uh so, let's use our Massachusetts market as an example. There's a lot of tourism traffic at certain areas of the state. Um, the South Shore, areas that people escape to during the summer season. Uh so, that seasonality approach, whether it's summer or it's winter out in the Berkshires, making sure that you're in the right spot at the right time. So, you're not just selling into a store to sell into the store, but knowing that this is an area that's going to see increased foot traffic. You might get larger orders.

You might have different needs from these partner accounts uh during these seasonal approaches versus what they have on the the other times of the year that aren't these like high-traffic seasonal areas. So, how can you, you know, still be in the right place at the right time, but still give your partners the things that they need to be successful?

Got it. So, so pretty much that means assisting your relationships with understanding the market from your perspective, understanding the customer, and then strategizing based on that.

Yeah, absolutely.

When talking about that, a lot of people talk about cannabis becoming um um more corporate. Um do you think that's helping the industry mature, or is it slowly killing the culture that made cannabis special in the first place?

Yeah, I'm I'm not convinced that corporate, you know, corporate as we all kind of know it is the problem. I think that losing the soul is the problem. Um the industry needs that structure to mature. We all know that it it's still a maturing industry, right? But it can't lose its curiosity and authenticity behind who we are. So, you know, when professionalism is used to elevate education, um I think it outcomes of of that piece of education are like bringing the real-world research into the conversation. So, it strengthens that corporate environment of cannabis culture instead of just erasing it. Um and it still maintains that authenticity of who we are, what we like, and how we're community first and foremost.

Very well said. Uh do you have like a tip of how you maintain the the OG cannabis spirit uh while sort of trying to, you know, uh manage these uh new corporate entrances and uh um the whole professionalism, let's call it that way.

Yeah, I I I think there's that line between, you know, keeping your community close, knowing who your friends are in the environment, but then still remaining true to yourself. So, you know, I myself included, I'm I'm actually the child of an incarcerated parent from the the war on drugs. So, my dad was um in jail for drugs uh for cannabis. And so, for me uh staying true to myself, where I come from, who I am is part of my culture and my background of my soul in this industry. So, you know, the corporate environment is encompassed from a lot of people that have shifted from other industries that have found cannabis really intriguing. Um and then you still have those who are the OGs in this space that might have come from the legacy background, whether that's themselves or a family member. Um and just kind of remembering where you came from, what you built, why you do what you do. I mean, for me, I do what I do because of him.

Wow, that that's uh not to be cheap, but I I literally just got chills. That is That is uh That is great. So, so a very big part of you is cannabis itself.

Yeah, completely.

Love that. That's amazing. Um all right. So, on the topic of obviously business and and experience. So, you worked your way into a leadership role in a pretty uh some people might not say aggressive, but uh a pretty fast-moving industry. What separates the operators um that actually survived cannabis from the ones that disappear after a year or two, let's say?

Yeah, and and it's a challenging industry, right? We're we're all well aware of that. So, you know, I think the operators who last are the ones who stay teachable. Um you know, we can all learn something, no matter what the topic is. So, staying teachable, staying open-minded. I mean, cannabis truly moves really fast, especially too fast for ego, if you have one. Uh regulations change, pricing compresses, consumer preferences evolve.

Um high THC chasers versus terp chasers. So, the teams that survive are adaptable. They're data-driven. Um I think they're willing to change course quickly. They can pivot fast, right? So, if you think you've figured it all out, you're probably already too far behind. Thankfully, we do have a partnership with Thomas Jefferson University where a lot of what we do as an organization is backed from research and education amongst consumers. So, not just internal, but actually taking our products and putting them out into the marketplace, doing studies on anxiety, insomnia, pain management. So, remaining teachable ourselves based on what we learn from the environment that we're already living in and the people that support us on the daily.

And then obviously as it relates to research and development of new products that we may launch into a market and taking the data that we're learning across the organizations that we're operating in and then everything that we learn through our research partnership with TJU is kind of informing how we stay teachable. So, I think we do have a little bit of a unique identifier as an organization because of our partnership and how lucky we are to to have that deep bench.

That is that is quite fascinating. How did that relationship with TJU start initially?

Yeah, it's something that's been going on for years and it started a lot smaller than what it's become now. Initially, it was just kind of like dabbling in the exploratory phases of how can we turn this into research projects and now it's really evolved into what do the people want in here? What are the elements that individuals really want support with? One of the biggest things I think in the industry that we hear or see even from, you know, our own friends and family or or whom have you, are sleep problems. People want to use cannabis to sleep. So, we thought, okay, well, this is the perfect time for us to launch a study to see if there are any legs here surrounding sleep, insomnia.

What works, what doesn't and we're kind of learning as we go, right? Our information that we receive from the partnership has been wonderful when it comes to relaying back to patients particularly in Pennsylvania, but just across our whole portfolio in in how we can support true consumers of the plant and of the product.

Amazing. That is truly amazing. The knowledge, the research, the education backed up by data plus the expertise that you guys have all together is is a great win. Wholesale is one of those areas people outside the industry don't fully understand. What's something happening behind the scenes right now that most people, even inside cannabis, are completely underestimating?

Sure. Yeah, wholesale feels like a different world sometimes, right? We all laugh about that, but so I think for this education is really, you know, that piece that's becoming the most powerful differentiator in wholesale. So, you know, there has been an evolved capacity of the quantity and the quality of education that's being released into the marketplace on any avenue. So, I feel strongly that buyers and budtenders, we all know they're overwhelmed. Uh there's so many options.

There's so many brands. It's hard to distinguish the what, the why, except for I'll give you a good price on it, right? So, brands that can clearly explain, you know, why their product works and to back it up with the data and training, I think are really earning trust and reliability at this point. So, you know, back to our partnership with TJU, that's kind of why we invest all of this time and care in education and research. So, it really shifts the conversation in my mind from that hype to being credible, which is really the lane that we want to be in.

If I understand correctly, it's like you literally help out budtenders do their job by taking off a bunch of work off their hands by you doing the majority of the education, writing of information, and so on and so on. And therefore, it sort of leaves the budtenders more room to promote you as a brand itself, right?

Yeah, and whether we're selling our products our Ethos family of brand products, right? In any one of our own Ethos dispensaries or we're working with one of our retail partners that support us across our portfolio, we want them all to be able to speak as intelligently on the products. So, we want them to have a united front and alignment on educating the consumer or the patient, depending on the market, on that particular product, that SKU, you know, the the benefits of it. Um you know, pointing them into the direction of the right product. So, it's not just about our own team. It's about education in totality from budtenders, whether they're our own partners at our own stores or people that we wholesale to, and then ultimately making sure that that information from the education and the research that we do is trickling down to the people that are consuming the product.

Sure.

If you had to predict the next 2 3 years of cannabis, what changes do you think are coming that will completely reshape the how brands, retailers, and distributors work together?

Wow. Okay, so you know, the next phase of cannabis I think is going to be relationship driven, right? Not reach driven. So, brands will need to act like true partners, uh not being just suppliers of the industry. They'll need to be bringing insight, consistency, continued education. I think that, you know, retailers or retail partners in any capacity will expect smarter support, if that makes sense. Wholesalers have to become more of that strategic connector for the needs of their partners. I kind of spoke about that in the beginning where we're identifying the things that fulfill the needs to our partners to become successful. So, companies that combine operational excellence with just real-world knowledge, right? Data capturing. Those are the ones that are going to win.

Um cannabis has always been about people. So, patients, consumers, operators, and the communities that we're all operating in. Um I think the industry doesn't need less structure. It needs better leadership. Uh so, better leadership comes from listening, learning, respecting each other. I think it's both the plant and the culture while we all sit here and play the long game, even though cannabis operates so quickly. Um it is a long game.

Yeah. And what you said at the very beginning was uh maintaining that spirit. I think that the spirit of cannabis itself, if it's held to where it was originally, is going to go really long way. And as you said, it probably will impact the future of cannabis and where it's headed and the overall success in the cannabis industry, if you manage to to keep the spirit up. Um so, yeah. Love that. That's That's amazing.

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# The Shift, Ep 5: From Compliance Startup to Acquisition

URL: https://www.tryheadquarters.com/podcast/ep5
Guest: Michael Elkin
Summary: Michael Elkin on founding Cannabis Compliance, global licensing, and what separates operators who last from those who burn out.

Transcript (auto-generated, lightly edited):

You entered cannabis before most people even believed it would become a real global industry. Looking back, what was the moment where you realized this wasn't a trend, but a massive long-term business opportunity? And given your story, I mean, this is a I I think this is a perfect question for you.

Honestly, like I when I f I got into this uh I was driving to work one day and I was uh living in a small city in Canada um installing cameras in prisons and hospitals. I was a security integrator and I literally heard on the radio that there was a company that was going to be buying a rundown chocolate factory and turning it into medical marijuana. And that was back in 2013.

And and at that time I was like a what's medical marijuana? And there's a Hershey factory like literally right beside where I live. So, I think it was like the that that moment when Canada legalized on a medical uh platform back in um in in 2013, I think gave me a little bit of insight. I was like, "Wow, this is this is something, you know, that I grew up consuming. This was something that, you know, my parents uh you know, did smoke back in Woodstock, but then where there, you know, they were like, you know, anyone that's smoking weed is not going to get anywhere." And now here we were as a country getting ready to legalize medically. Um, and that was like my first like aha moment which led me to follow up with the next three years of installing security systems uh into the first legal medical grows in Canada. And then I would say the the second aha moment was you know after Canada got ready to go adult use. So we ran medical for four years. Um, and it was it was when I got a a random DM on LinkedIn from this other gentleman that said, "Hey, you know, I've been following your career over the last 3 years. Uh, and I know you're this security cannabis uh, guru, and I'd love to put a couple of people together and start a firm that would, you know, be this inflection, you know, driver of of actually writing applications." And back at the end of 2016, there was only 50 uh cultivators, licensed growers in Canada on the medical side. And if you fast forward to today, there's over a thousand. So again, I was at the right place at the right time. And then that DM turned into the forming of the compliance company that we started in 2016, which then um went, you know, like a rocket ship. and you know grew from me and three guys to uh 115 employees in three years and writing uh you know regulations and licenses in seven different countries.

So I think I've had two aha moments sort of like this was going to be something. Um yeah so those are sort of two big moments in my career.

What when you got that DM? What was your like initial reaction? Were like oh this is interesting. Were you confused? Were like amazing. What was do you remember what was that initial?

I remember like it's there's a very very first of all I still have the DM so offline I'll send you the the DM. Um and it was like I was very at the time I had spent three years um installing security systems in some of the coldest places in Canada. So some of these early grows were being built in like remote locations. So at when I first saw that DM, I was like I was like, "Oh man, can I really stop like running off to bum nowhere Canada for like three weeks at a time in minus 40° to stand on a ladder and install cameras." So that was my first thing like oh wow I can stop like running around and because at the time he really the the gentleman approached me he's like I just want you to like design the systems you don't got he knew I was in like northern Ontario and like uh southernmost part of like Alberta and really really cool places. So um so yeah so he uh he had he had he had offered me that uh that position and yeah um and then we were off we were we were off to the races and it was actually my um I remember I'd given this giant list of demands that I had wanted. I I really would have left for anything because I was so tired of doing all these installs. And then like in I think in the same DM he was like, "Yeah, for sure. Whatever you want. Like let's let's start this." And then I quit the security company in December of 2016.

And we had like uh officially launched what was then known as Cannabis Compliance Inc. or abbreviated CCI uh in April of 2017 in Berlin at the first ever ICBC um conference. That was the first time that we had made like a public appearance. We had traveled and we were like and we first started talking about like a full compliance firm that was able to like specialize in writing regulations in any country that it really just boiled down to rules and regulations. And if you had enough smart people in a room, you could figure out how to write an SOP for whatever. So that was the that was the birth of the compliance company.

Wow. And so so you know when when talk about the obviously you mentioned compliance. So you you've worked across compliance licensing uh security systems, business development now even and the brokering deals. So when you look at all of the experience from your perspective, what separates the companies that actually succeed in cannabis from the ones that burn cash and disappear?

Yeah. Like it sounds so cheesy, but it's it's like it's life. It's it's like what makes a successful company that I work with is what me what makes me successful. It's relationships, reputation, and execution. It's like who do you know? what have you done with those people? And then what do other people say about what you've done?

It's like

it's like that's why people answer my emails. That's why people answer like my phone. It's so like that's what differentiates. It's like what cannabis companies are aligned properly who have the people right working in the companies. What are the reputations in the either state or in the country? I find cannabis you have like one strike. This industry is so tightly knit. It's a small industry in a giant world.

Um, and like everybody knows what everybody else is doing and it's like when you over word travels quickly.

Yeah. So like like that it's something that I learned when we were running the compliance company like we were the most expensive firm and like I would say I would stand there at a table across from someone else and I was like this is what we charge to file the application and we're going to get your application. I'm like and they were like well how do you know that? I said cuz back at headquarters I have 75 of the smartest like regulatory people that are trapped in a room happily uh and they're not here. It's like my job is to to meet you, to give you the comfort that what is behind me uh is supporting you. So, it's really about like what makes those successful cannabis companies are the ones that have great reputations, great relationships, internal and like that the janitor and the CEO mop the floor the same way.

Like super important. Like there had like that message and culture has to bleed from top down. And it's like you can tell when you can tell when uh when that's not like that.

Yeah. Yeah. And also I I I assume that you know because of uh everything that you've done and and given that the focus that you've had on relationship I figure that's where your international experience came from as well. like working with all of these different countries, different states, and uh being all around the world and a lot of people outside industry don't realize how complicated cannabis regulation really is.

Yeah.

Especially now that we're expanding so much. But you've helped companies across more than 10 countries.

So, what's one behind the scenes reality about global cannabis that would shock most people? I don't know if it would shock most people, but really like cannabis has always fit into another box that had existed before cannabis. And what I mean by that is like a great example is what's going on in the United States right now. They originally classified cannabis with heroin, cocaine, and opiates. and now they're moving it down to a schedule three in the to the same category as like Tylenol.

So like these schedules existed right before cannabis was even brought into the equation. So like really if you're in an emerging market that is being regulated, first of all, it's a good thing.

Second of all, like there's a script. And what I'm trying to say by that is like there's no secret to figure out cannabis regulations. You literally need to like just follow the guideline of the box that it's in. And a great example of that is what's going on in the states right now because we're I'm helping tons of companies go from schedule one to schedule three. Right? M so like in their schedule one when they were with heroin and cocaine and all this stuff like they knew like they have 80% taxes cuz if you have an opioid factory you pay 80% in taxes but you're backed by big pharma so who gives it so like trying to educate the the new cannabis license holders in the states about this and saying like this is exactly what's going on in the states is exactly what's happened in Canada. So I think something that's going to shock that should shock the Americans right now is like this is a direct copy and paste. So the government and the United States government is literally looking for you to take this substance and like place it and hold it and interact with it the same way you would as a schedule one drug. So when you have a schedule even in a schedule one drug like you need to have like a safe facility to store inventory. So, a lot of these I'll give you a great example.

There's 4,000 license holders in California. There's only 500 of them that are medical, which means there's another there's 3,500 that are not medical that don't hold that will not be able to apply for this DEA unless they uh amend their license. So, like all those 550 something medical holders are already ahead of the game. So, they already have like secure storage. They already they already have those things.

So what I would say is like in any existing market that is getting cannabis regulated, look at the playbook that already exists and you're all your cheat codes are in there because there's standards, there's SOPs that that exist and you're just essentially taking the API and putting it into that like box. Doesn't matter if it's Tylenol or like cannabis. If you're making Tylenol, you're done your finished product. they want it in like a secure vault or whatever till it's picked up to be shipped to a pharmacy or whatever it is. It's the same thing with with cannabis and and all this re all this regulations that's coming in the states. Um yeah, and I would say and the other thing I would say is it's very hard for lawyers and accountants to write SOPs, standard operating procedures for like deviation. It's it's a game that we played in Canada for a very long time where there was like a few different people, a few different firms that could write an application that Health Canada would deem worthy of a license. And like less than 50% of the time, the ones that got stuck in the cues were all these lawyers, all these accountants, you know, like a lawyer is good in court. He doesn't not a lot of lawyers know like an SOP for destruction of plant matter or understand like transport of tissue culture but like

you know you have to go to like a subject matter expert and that's really what we developed CCI into you know we hand we hired the most cannabis knowledge people and then when there were none of those left I was like go let's go let's go pull from pharma you know like some of our best sales guys we have from Red Bull from Heineken, from big tobacco and like these regulated industries. So any like emerging cannabis market, I would say like anyone that's looking for licenses, make sure you're aligning yourselves with like regulatory people.

Yeah, makes sense. Also, that that is actually one of the things that we as a company also are really really focused on like especially when we're hiring people for uh for the job. The main thing is like you can be a professional as much as you want. you can have a bunch of experience all around the world with everything. We need someone that has cannabis experience, specific cannabis experience, because outside of that, it's going to be very hard for you to get into understanding what the cannabis market is right now. And um that is something that I really uh feel like is one of the things that also sort of kind of makes us stand out from other um standard outsourcing companies or whatever it is cuz it's like we need specific guys that had cannabis experience

period and that's it. I think that's extremely important. Um so help me out with this next question because I I wanted to make sure that I have my facts straight. So, um, you were part of CCI before it was acquired by Deloitte, right?

Yeah. So, I was part of the founding team. So, it was me and three guys

and

Yeah. Sorry. Sorry. Go ahead.

No, no, go ahead.

Yeah. So, I wanted to because this is obviously huge milestone, right? This is extremely big. What did the experience teach you about where cannabis is heading from a corporate and institutional standpoint? Because a lot of conversations that I had with a bunch of people from the industry is like how the corporate is affecting cannabis vice versa and you know what's going on with the whole cannabis culture/cannabis spirit and stuff like that and that's what I wanted to to hear from you as well. I mean like again you have no choice with when all these countries are regulating or are legalizing

um like you have to adult up and again it goes back to this whole thing that's going on in the states right now like if you want to take advantage of this adult use market and and you know expenses and taxes and safe banking then you need to like follow rules and regulations. So like like this is it's you're on the bus or you're under the wheels with this.

This train is going and you like it's like it's I don't want to say the black market and legacy is going to ever like not exist. I just think that there's room for like like there's nothing there's there's culture and there's everything that exists in California in a regulated market never went away because it was regulated. So what I would say is like there's further regulation coming, right? I mean the states are going to legalize eventually. They'll do interstate commerce. Eventually they if they get their standards in order will be able to be like Canada, you know, I think it I forget what the number was 4,000 40,000 metric tons shipped into uh international markets from Canada. Um but again like those those license holders in Canada pay their taxes. uh you know they're they're they're they're on the they're they're like grownup businesses. So what I would say is you know the corporate world is coming um and you either are going to be a part of it or you're going to be left out of it.

So and I think this first thing in the states is a first indication of who's going to be like I don't want to register for this because I'm seeing it now. I have a lot of California companies that I'm dealing with. They're like, "No, we don't want to. We don't want to give our information to the DEA and they're going to do this and they're going to that." I'm like, "No, you don't understand. Like, this is what it takes to get banking." You know what I mean?

Like, do you want to still have the duffel bags under your bed and garbage bags on your windows and worry about who's coming to your door or do you want to have Canada and like have the government write your purchase orders for your wholesale business? Like, that's that's the that's the way it's going to roll out here, right? like so you you either adult up and get you know and and again like there's there's a lot of benefits with this with this changeover. So I wouldn't say as much as it's going to be like corporate cannabis as as it is regulated cannabis.

So you know I think you have to pick your battles with what you what you want to like die on the sword for if that makes any sense. And also I mean it's a very speedy market and if you you also have to be fast in every aspect of it whether that's you know like new things coming into it whether that's the current things that are sort of expanding changing moving you have to just make sure you're following. If you're not then you're out and uh and I think that you really made a very good point there.

It's like at the end of the day you're not you might not even have a choice. So you win it out.

That's why it goes back to my whole like relationships thing is like you're it's so important about like who you're talking to, right? Like who's advising you, who you're talking to, whom you're selling to. It's it's everything. That's why like I have this other saying, you know, you're the average of the five people you surround yourself with. So like choose wisely, you know, like you got to who am I spending my time with? Who am I like tying my, you know, ty what I tie my horse to? That's the saying. Anyways, yeah, it's just it's super important because again, you have like one shot in in this industry and yeah, you want to be around doing this for a while.

No, I I completely agree. And uh also, you know, speaking of uh the relationships and and ultimately again the the way that you're sort of everywhere in the industry. So as someone who talks to operators, brands, investors, executives, uh, and so on constantly through Canna Broker, when you look at everything and when you, you know, go off fish a little bit in the future, where do you honestly think the cannabis industry is headed in the next 3 to 5 years, who's going to win and who's in trouble? Um, if if we take away this aspect of what you talked about just now, which is, you know,

follow don't follow and stuff like that.

Yeah. wellestablished brands, multi-state brands, multi multi-country brands, brands that have established uh retail footprint that understands supply chain that understand what it takes to pack like 50 cases of like three and a half mylar bags, you know what I mean? Someone that understands how to ship 100,000 vape carts wholesale on a pallet to here to there. I think once the states gets their stuff in line, I think once Germany gets their stuff in line, like you're going to see like a full like supply chain of CPG like goods and and and and trade and commerce. And I think, you know, you'll you'll have like supply chains that'll be international.

I think Canada's going to play a huge role while the United States gets all their stuff together. That's why I have a huge interest right now to bring a lot of American brands into Canada. and then start immediately exporting those brands on the German and the medical platforms. But the German and the medical platforms are looking for established brands that have stories to tell that they can then start telling these stories to to markets that don't exist, right?

So I think that's hugely important is like get your like company story together, be existing in legal markets and as many as you can um and have like good relationships in those markets because like those international markets will come looking for the stories to tell

and and Mike, so when you talk to brands that you see have potential to to become one of these

and How accepting are they of what you're suggesting, of what your idea is and what you feel like is is what's going to be good for them. How hard it is for you to negotiate them or or or make them follow what you're saying?

Like right now, not at all. Look at the brand lineup for Mary Janes in Berlin in June. Every freaking sticker that's on this wall is is at Mary Jane's and there's no adult use market in Germany.

It's it's medical. So, like every single one, every single brand that I'm talking to and I'm I'm speaking to the Wizard Trees and the Preferred Gardens and the Alien Labs, like that from my experience is like that's the pathway now is get into Canada, get into a few hundred stores, build that brand because in like three years like we there's going to be some type of hybrid in Germany, whether it's through consumption lounges and pharmacies and this and that where like they will they'll we'll be exporting pallets of of like finished goods. into Germany for distribution.

So that's that's my like that's what I'm that's why I go to California lately. Uh in at the ICBC show in April, there was a ton of brands that we're speaking to now. Um so they also see the writing on the wall and and even as the states does this whole rescheduling, they're still like 3 to 5 years away from being able to move anything out of their country. I think at best interstate to ship stuff from California to Michigan. Yes, that that's going to happen and the DEA is going to regulate it. But again, Canada was medical for almost 5 years, then it was adult use. States is doing the same thing. It's the same playbook.

Yeah. Yeah. Yeah. As you said, copy paste all over.

Copy paste. There's a DEA portal application the same way Health Canada had a DEA portal application. It's hysterical. I'm literally living through that saying if I was able to go back in time knowing what I know now. This is literally me going back to like 10 years ago or whatever it is, knowing what I know now. That's why it's really funny for me that that's why I'm going to California next week. I'm sitting down with I think 10 of the biggest brands, excuse me, to like really explain to them. I'm like and we and we've been talking to a bunch of them over the last like three, four weeks and they're like, "Yeah, this is what it says." I'm like, "I know. This is what they said." They're like, "We have to do all this." I'm like, I know. This is exactly what we did. So, yeah, it's it's it's it's a it's a fun place to be right now.

Yeah. But it's also good for you because you've been there.

Amazing.

It's amazing.

Yeah. I love that.

It's amazing. I was on a phone with an MSO this morning who was like, "Our lawyer said this." I was like I was like, "Can you can you get your lawyer on your phone with me? Our he doesn't want to talk to you." I'm like, "No, no, no." Like I was like, "What is it?" Because they don't want to charge me or like he doesn't want to talk to you. I'm like, he's scared of me. The I'm like,

yeah, because any again, it's it's lawyers are are very well in a in a court of law. They're very bad in a pharmaceutical grade facility.

Same thing with an accountant. Take me an accountant when I get an audit, not when I got a a regulator knock on a door and ask me to see SOP for this and can you pull up camera 4 for growroom 3 uh two weeks ago. Like that's where you have to have like proper compliance knowledge.

Yeah, makes complete sense.

Uh Mike,

as always, it was extremely extremely useful talking to you because

yes,

a bunch of knowledge just came out and like, okay, I love every single thing uh about this one. Can you tell whoever's viewing where they can find you on social media?

Yes, for sure. First of all, thank you so much. And I think I have to make my way out to Serbia. Wink wink. Right. That's that's Yes.

You probably very soon. So yeah.

Okay. Good. Uh you can find me on Instagram, the Canna Broker. So that's no E. It's the Broker. I'm on LinkedIn, Michael Elkin. Um and yeah, you can catch me any like major trade show that's happening over the next like six months in North America. Um and yeah, really thank you so much for the opportunity speaking to you and um love the connection. the extreme pleasure of my guy and uh really looking forward to meeting you again in person. Enjoy the rest of the day and we'll chat soon.

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# The Shift, Ep 6: Inside Cannabis Finance

URL: https://www.tryheadquarters.com/podcast/ep6
Guest: Alex Ceja
Summary: An inside look at how F&A Services Lead Alex Ceja helps Headquarters’ clients navigate finance and accounting while growing their businesses.

Transcript (auto-generated, lightly edited):

What categories are there in accounting and finance and what are the divisions uh of services teams in your department?

Okay, so this is a big one. Uh I will mainly group I think that we are doing a bunch of stuff in the team but I can group them into different categories. So the one is going to be more focused on specifically finance and accounting. So we call it controllership. So let's think about this. I've seen in the in the market like a lot of options as a part-time CFO, but no one is offering you like a part-time controllership. So, this specific service is including everything from finance that will allow you to operate. So, AR and AP money coming in, money going out, so you can know and you can still like collect those phones uh but also making sure that you're sending those payments so you can still run. And at the same time, uh well, you need to categorize all of these transactions. you need to book them also reconciling everything. So this is going to be what a a bookkeeper or an accountant will do and the controllership is like the glue. So he will be in charge of this team ensuring that everything is working smoothly. So you can go from let's say uh I would say that we start with a bank transaction.

So your bank is linked to your QuickBooks. So this whole team is going to be in charge of categorizing and linking and just putting the the right uh GL to every single transaction up to getting to the month-end close where they will continue doing the journal entries adjusting. So think about allocations or maybe uh acruals. So at the end you ensure that you have your financial statements call it uh balance sheet P&L and well if you have inter companies making sure that these allocations that you are transferring a specific uh charges to every single one of your entities so you are reflecting the right revenue uh the right profit or the right cost in the right entity that's the first one so controllership then if we move the other one is called at this moment it's a mix between FP&A or well the name uh financial analysis and insights and we rename it from FP&A to that one and the reason is because what we are mostly doing for our customers is to help them understand their numbers. So yeah you have a bunch of numbers uh in your POS in any kind of your software platforms that you're using uh sales platforms inventory platforms MRPs etc. And what we're doing is it is hard to read that information or sometimes it's it's too much. You have a bunch of uh details and maybe you don't want to to waste your time anal analyzing every single KPI or every single thing that is happening. So what we do is okay give us your focus.

So you want to focus on sales. Okay, let's do something about it. So we can work with a let's say platform. So we can tell you okay these are your top selling SQS these are your top markets these are your top customers these are your KPIs also we can tell you okay the performance so how well is performing Nabis like how much is it costing you to work with Nabis u just maybe doing a an analysis on how much you're paying for fees uh considering let's say the distro fee but also any other kind of extra fees that normally Nabis will charge you and how much you're getting like how many customers you're getting because at the end Nabis is a marketplace. So if you're working with Nabis, it's because of two reasons. The first one is because they will help you with the distribution. So you need to hire drivers, trucks, etc. But at the same time, it's a marketplace. So you're going there because in theory, it's supposed uh it's supposed to uh open you to new customers, new markets, new regions, etc. So we can give you this analysis so you can determine if it's a good business or not. But at the same time we can help you with the the KPIs of your sales team. So because well you know and while working in Nabis you can say okay this is my wholesale price.

This is my at the end how much I'm I'm selling this price um sorry this product. So you can you might give a discount but it can be uh a discount based on the top price or the lower price. So we'll we'll help you to calculate the real discount that each of the sales rep is really giving because it's maybe on paper it will look like okay from this price I give a 5% discount but if you analyze how much it is really costing you versus the price that you were trying to uh sell this specific product there might be a a difference so yeah I will say that or financials analytics and insights it's it's helping you to understand your numbers and just gathering the data from any kind of platform. Uh also we've identified that there's a bunch of let's say no uh that is not clean. So we need to focus on a little bit of data analysis where we need to clean the information. we need to parse it uh a bunch of times. It's names and conventions to just to making sure that we're analyzing the same uh names, the same let's say maybe brands, SKUs, strengths or whatever in order to give you a report. And just as a a brief description, if you hire one of these services, what you will get every single week is first of all, you will receive an email at some moment of time during the week. I'm saying this like randomly because it depends on when you want to receive this information. Normally it's between Monday, Tuesday or Wednesday and this will give you a quick analysis. So a quick snapshot. What we're trying to do here is focusing on two different targets. So one of them is let's say C-suite uh investments owners. So these people they just want to read something really fast. So what happened with my company in this specific area in less than five or 7 minutes. So I just want to read understand and that's okay. So something you can read even your phone.

So they will this will be an email that will adjust your phone so you can read it carefully. But then uh let's think about maybe a CFO or a controller that they want to dig into the numbers and just making sure that everything looks right or the calculations everything. So you will have access uh to the actual report through the link. So in the link you can see the spreadsheet you can see the calculations you can see where the information is coming from and if something looks off it will be issued to detect there and at the end you will have we are working uh as our BI tool we are using Data Studio which is a tool uh that is coming from Google. So uh with this you can play with information. So these are we designed them in a way that you can play with information. You can uh filter information, you can present information in different ways. So you can do your own analysis without needing to work through a spreadsheet. So every single time that you click on a slicer and you will select that a specific option, all the information is going to be updated based on that specific filter you would like to apply. So um you can play with it. It's it's fun.

Alex, you So I have two follow-up questions. you did mention uh QuickBooks and Google uh in in your speech about the services that you offer. Where's the familiarity of tools when it comes to the cannabis industry lie with you? Like how familiar you are with other tools and not just like the main popular ones?

I would say we're experts on QuickBooks because this is the main let's say ERP or accounting tool in the industry. So I would say from every I don't know 10 or 20 customers only one of them is not using QuickBooks but we can also use Sage, Acumatica uh the team has experience with SAP so a bunch of different tools and what I would say like

yeah we're able to to work with any one of them I would say QuickBooks is even though a lot of people complain about this tool I would say since it's the main one or the most common one, it is the one that it's easier to handle. So something that I would say it's pretty attractive from working with us is that we develop a tool called the QuickBooks gateway and it's just in summary or in a nutshell or the simplest way that I can describe it. We just have a connection uh something that will take us 5 minutes. So let's say if we want to connect your uh company or your QuickBooks entity with us, we can just schedule a quick sync maybe 5 minutes and even though you can do it on your own but well the link will expire based on uh the QuickBooks requirements. But what I'm trying to say is that with this connection we're able to extract information from QuickBooks. So sometimes working or analyzing the information in QuickBooks is kind of hard or maybe sometime it's even slow.

Why? Because you need to click a button to get to an specific report. So uh we are just avoiding to do all these five, seven, 10 different clicks and we're just extracting information directly from the API and put it in a Google spreadsheet. And with this spreadsheet we can get creative. So you can do a bunch of different things. So uh maybe a quick example. So uh some of our customers are asking us to hey I'm doing this exercise that it's I would say it's it's pretty common in cannabis on the big MSOs which is called debt swap. So what they're doing is they have customers and vendors that they have balances open with them and what they do is I'm not going to send you money but let's see how much you owe me and how much I owe you and let's just offset these balances. And yeah, before

us what they were doing is let's say maybe think about that they have 10 different entities. So they have presence in uh 10 different states. So they needed someone downloading the AR detail report the APD2 report one by one for every single entity. So we're talking about 20 different entities manually and then just copy pasting and then updating all the formulas. Now with the uh API that we have, we just click a button and in less than I I would say five 10 seconds you have the data information and if you would like to refresh you can do it just right away.

So we're saving a lot of time and everything is from the gateway where you know like okay this is attractive I have this balance hoping with this specific entity uh I would say I don't want to mention names but we have helped uh one of our customers to offset in the past I would say month around $1 million. So just think about it like all the efforts that you are um reducing of having someone to collect those those funds or maybe something that it's to age. I'm talking about balances that have open more than one year. So in theory well in cannabis what I've seen is that if someone owes you something and it has more than 90 days it is almost uncollectible. There's nothing that you can do about it. But now here you have some leverage. So okay I owe you money. You owe me money. Why?

like maybe you don't have funds but we can offset, it's going to be something that we just need to adjust in our balance sheet you will give me a credit memo I will apply it and I'm I'm going to do it the other way so now with this customer uh we realize that this is something that the market is really interested in uh we're trying to offer this exact same service to other customers and what I can say is that yesterday I did analysis and we can still help this customer to offset $2 million so it is something that let's say the work that we're doing it's paying for itself pretty easily and this is just one of the examples that we can do we can get creative and we can do a bunch more stuff uh with information that we can gather from uh the API we can just uh take the P&L the balance sheet or any kind of a specific report and we we can create a bunch of uh things I would say it's just a matter of uh trying to solve different pain points across our customers

yeah well you're saying right now is something that I've come across a lot in the industry when talking to a bunch of different people uh both MSOs and uh SSOs and what I've noticed is like there there definitely is this very big um problem in terms of trading partners versus non-trading partners. especially if we're talking trading partners and as you said like you owe us, we owe you and there's this open balance that sits down for like god knows how long. Let's just make sure we clear this out by either um going with uh credits or whatever it is.

Uh so I I feel like I understand how that can be beneficial. Um and then I wanted to revert back to the original uh conversation when you were talking about a reporting and this is something that like you know it it is a very crucial thing. A lot of people want to know exactly what type of reporting is available from from your standpoint. If I understood correctly, you go from like the executive level reporting very quick, very simple as you said, like you can look at it on your phone, but you also go in-depth if we're talking about specific departments that want more in detail analysis about specific topics and specific segments of the business.

Right.

Yes. I would say it's kind of the same. So uh what we do in the team is we are not try to get in a comfortable position like okay this is my reports this is my catalog and this is what I'm going to do and that's it. Now what we like to do is okay tell me what you're trying to uh solve like which is your pain point where you blocked and we are just going to brainstorm and look like okay you have this information that it's coming from QuickBooks or maybe you have this information that it's coming from let's say your uh seed-to-sale or your POS so let's just try to connect this data so something that I've uh realized is that maybe in some other industry there are true ERPs so call it SAP or maybe any kind of Oracle. So you can see everything everything is connected. So you can track uh maybe let's say in this industry from cultivation. So whenever you are growing a plant uh you can know up to the sale like which were my margins where my costs involved into specific batch. Everything is tracked and in theory can be this exist. So if you think about METRC, it is a blockchain. So the information is there.

You just need to uh be able to track it down. So uh whenever you have a a plant there's a METRC code and whenever this plant uh gets uh let's say extracted into something different like the all the vapes whatever you're going to have a bunch of different METRC codes and then uh when this is packed uh into different uh specific products like again call it vapes or pens you're going to get uh now different codes and then this will be sent to the retail store and then someone is going to purchase it. But if you track like that specific pen in theory with METRC you can track it down to the to the plant. I would say the the interesting thing here is again in other industries you have an ERP that will help you to do this process. But here in this industry you will have Quickbooks which is managing the accounting information. Then will you need probably an MRP that is help you with inventory and also the bill of materials and just calculate the cost.

And then you will have a POS that will tell you how are you selling your product like the finished product that you're selling to the end consumer. But there's no like true connection between these tools. There are different tools, different providers. Uh so it is kind of hard. So what we're doing is okay, let's just look for the connections. There's going to be a a path that we can follow.

So every single time that you're creating a batch, you are uh then uh doing a set of different uh products. So helping you to identify every single one of them and creating reports for you so you can know your margins, you can know which product is really performing as you are summing or the ones are maybe you thought like okay this is going to be a a strain that is going to kill it but at the end uh when it is in the shell it is not selling. So you can identify like okay this is something that either the market is not liking it we're not pushing it hard enough and also what we're trying to but some something pretty interesting to that we do is with inventory we help the retails the brands to know uh if their product is moving or not because sometimes it is just there like they have storage they have maybe I don't know 10 boxes 20 boxes 100 boxes of specific product and it is somewhere in the retail store, but they don't know that that product is about to expire. They don't know that maybe they they buy more like they they didn't know how to calculate the demand.

So, this is something that we can help them with. It is not that easy. Of course, uh every single strain, every single product uh has a different behavior, but at least we can try to uh give you like something closer to what is going to happen. So, let's say if a retail store hasn't uh sold uh let's say a thousand vapes during a a month, then it makes no sense to send them like 2,000 vapes unless it's going to be for training or an specific uh thing. But we can help you to make better decisions while we do this kind of reporting.

Yeah. And when I listen to what you're saying, I sort of feel like, you know, some people might be on the side saying I this literally, you know, one person might be able to do all of this as like a specific position. But one of the things that you showed me where um I was really impressed is the is the money saving scheme. Can you jump into that a little bit more for us? Cuz that was one part that I'm like, "Okay, I'm sold on this one. This this completely makes sense." and it will probably answer a lot of those questions about why not do in-house versus having Alex do all the work.

Okay, so let's I'm going to start this with thinking about uh maybe the easiest example that I always uh use is let's think that you hire an accountant. It's going to be a senior accountant, some someone that is going to help you to uh close your books, assist you with a month-end close up to creating financial statements. But let's think that maybe you are paying this accountant, I don't know, maybe $30 per hour, $40 per hour.

So you want this accountant to be as efficient as possible. But then when you're talking about accounting, there are a bunch of different tasks that you need to do to complete. So sometimes it's just categorizing transactions, which is something important, but at the same time, it's something that it's not really adding a lot of value. Or maybe let's think about, hey, I need to do the reconciliation. I need to reconcile this uh account statement or this vendor, this uh customer or maybe this specific GL account. So reconciling is something that is pretty time-consuming that you don't want to spend let's say $80 or 30 or $40 per hour uh to someone to do it please. So what we offer is think about u like u you're not hiring one person you're hiring a team to do this work and this team it's a combination of you'll get junior mid-level senior or maybe even a controller to do all this work. So it's going to be more holistic. So we're not going to charge you like hey you you will have you will need to pay me uh let's say $80 per hour because all my services are charged as a controller.

But it's more like we're going to make a package for you where we're going to get to a midpoint where instead of charging you like $80 per a controller, we're going to charge you $40, $50 depending on the volume and the complexity of your work. But we're going to be able to do everything. So from reconciliations from categories categories of transactions, AR and AP, call it invoicing cash application payment applications sending payments uh month-end close uh creating financial statements helping you with reporting.

So everything is going to be in a package. So let's think maybe maybe your your company is not that big. So yeah you need a a bookkeeper but this bookkeeper will be limited to to the position. So, uh

let's let's think about maybe a staff accountant. This uh person um will be able to to close the books, but sometimes like a uh yes, but this person doesn't know how to do reporting, but this person doesn't know how to talk to a customer. So, there are different profiles. So, what we are offering you is more like yeah again a holistic uh proposal for you. So, you can take everything. So let's just think uh as our service as finance and accounting in a package.

So you don't need to worry about a specific uh person. You'll get a full department to work uh for you and we're going to do every single task that you need to get from point A to point B.

Yeah, I I understand that. So instead of hiring three different positions for the work that you need and then leaving them halfway through with like four hours per day left of not really having anything to do, you go with Alex, you get a package that is literally tailored depending on the time needed to invest in order to achieve these specific tasks and that's how you pretty much save the money. I'm going to go back to the beginning of the conversation as well where you did mention like if we're offering a service to a specific client.

So there, you know, in some instances there might be a specific focus depending on what their business needs are at the moment. But from a business perspective, like obviously there is a difference if we're talking about cultivator versus retailer. What does that mean for you? What's the difference in the approach of finance and accounting when comparing license types in different uh businesses? Okay. So, normally with uh cultivation and processing, they're pretty similar. So, the main focus there, of course, I'm going to say that uh for every single uh license uh finance and accounting should be uh almost the same. So, you need to uh to sell to send the invoices to collect these uh funds to send uh payments etc to close books to the month-end close, creating financials specifically on retail. Well, you won't have AR. So your main focus is on AP and accounting and just the financials. But then it is more complex working with a cultivation facility or a processor.

Why? Because they would like to see uh they're more related to cost accounting. So being able to track down all every single specific cost uh in the cultivation process or the extraction, the packaging etc. So we need to capture every single one of these costs to be able to create uh reports for them. So I would say this is the main difference. Um but again in theory uh every single company from this industry or any other industry they need to go from uh receiving transactions categorize them or to creating financial statements.

Tell me about plugand play. What is plugand play? At this moment uh we have the first version of the plug and play uh which is the Nabis plug and play. In theory the plug and play the concept is we have something that is already uh created and the only thing that we're missing is just the key the API. So whenever you uh get us access to let's say the Nabis API we're just going to connect uh the information is going to be refreshed now with your own data and the report is ready to go. So that's why we call it plug and play. We are uh thinking of uh potential uh different approaches on how to use the same concept or theory of the plug and play.

Something that we've been thinking about is METRC. So just METRC has an API connection. So uh we can do a bunch of things with METRC. But going back to the Nabis plugand play. So this is something that we're trying to to promote and this is something that customers uh find attractive. So this is I would say pretty niche. So in order for you to use the Nabis plug and play of course uh you need to work with Nabis but what we're trying to do is to give you three different uh concepts from it.

So the first one is sales. So how are your sales uh performing? So where are you selling the most your top customers uh and just helping you to understand which product is working good with Nabis? Nabis works with two different um uh customers. So one is going to be the brands which is uh sending the product another one's going to be the retail source. Uh but at the moment we're focusing specifically on brands. So they would like to know their product which one is the one that is performing good because I' I've seen um there are I would say we can categorize brands into different uh sections. ones one of them is those brands that exclusively work with Nabis and also those brands would work with Nabis but sometimes they do the their own self-distro so what I've noticed is that maybe before working with Nabis some of their products uh they they used to have some top products but then uh while working Nabis it switch so we help them to identify which ones are the ones that they should keep sending to Nabis because they are really performing uh pretty But uh then we have another section that is just trying to help you with uh the performance. So the analytics on the marketplace if it's really working for you, the charges uh if you're getting uh because whenever you work with Nabis, you get your your contract and they tell you like, hey, yeah, you're going to I'm going to charge you a 10% distro fee. But then it comes the question of is this going to be from the wholesale value, the dent value? So all the calculations uh are not straightforward. So it doesn't mean that if you're selling $10, they're going to just take $1. There are a bunch of I wouldn't say hidden fees, but if you don't read the they call it the brand partner handbook, which is a set of rules that are going to describe every single thing that is going to happen with Nabis and it's just like let's say the bible of working with Nabis. So and there's an specific section that will talk about uh fees. So uh maybe a label fee, if you send your product but the labels that they you send were not good enough and they need to do the labeling they will charge you and they will going to charge you for every single unit uh that they are doing for you. So there are a bunch of of different things. Uh but yeah we're trying to to to help you to to determine if all these fees make sense according to how much you're selling there. And lastly it is the AR portion. So we help you to identify uh your top offenders. So the the the customers owe you the most and well just you know like which ones are performing good. So yeah maybe just try to give you some uh hints on these are good customers try to sell uh to them more and also giving you like more granular details like which is the average uh price order uh that every single customer is getting to you how many days it it takes them to to pay you back. So you can make your own decisions. And sometimes the volume doesn't meet profit. So if you're maybe selling to an specific customer, uh let's say one $1,000 one, well, it's just a a random number, but uh if this doesn't translate to collections and also if their margins are not good enough, this might not be your top customer. But even though uh just in a in a pretty quick analysis if you see a big number like we are selling this is our top customer because we're selling them uh million dollars per month normally it doesn't translate. So it is more

you need to do a more granular analysis.

So with the plugand play what I'm what I'm hearing is that we're with the plug-andplay you're going to know what sells the best where and why. you're going to know um where to improve the cash flow through the AR plug-and-play. And then lastly, you're going to know where to save the money through the specific fee handling. That can sometimes be a little bit tricky to handle, but given you're a professional in that you have a lot of experience, you know how to how to make sure you execute the best on it. Right.

Exactly. Uh I forgot to mention, but we also send you there's some specific tab at the beginning, which is called the executive summary. So, we're going to give you specific details on every single one of the categories that I described so you can take actions into it. So, hey, these are your top performers or maybe you need to let's say maybe thinking about collections. These are the the orders that you need to focus this week. Why? Because if you get closer to uh 60 days past due or 90 days past due, probably you're you're aren't going to be able to collect. So maybe put a little bit more pressure into those. Um and also yeah you will receive us uh all our reporting uh a weekly email so you can have it you can read it and is is the same logic. So we're focusing on if you're a CFO like or maybe just uh talk about C-suite so you can have something to read pretty fast understand what's going on with Nabis but also if you want to go deeper into details if you have more time there's full report for you.

Very good. Very good. I now know a lot more about accounting and finance than what I originally knew. So really do appreciate that and uh thank you very much, Alex. Thank you.

Sounds good.

Chat soon.

Thank you, Filip. Bye-bye.

Thanks, Alex. Bye.

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# The Shift, Ep 7: Cannabis AR: From Spreadsheets to a Video Game

URL: https://www.tryheadquarters.com/podcast/ep7
Guest: Milos Stankic
Summary: Headquarters' most experienced AR manager breaks down how data, dashboards, and a healthy collections-to-sales ratio are reshaping risk and cash flow in California's cannabis market.

Transcript (auto-generated, lightly edited):

So, how long have you been doing AR?

I've been doing AR um for more than 10 years, but in cannabis I've been working in AR for five and a half years.

Five and a half years. I'm trying to think. I I believe that you might be the person that did AR the most that I personally know um from HQ. I could be wrong, but I think that's really it.

Yeah, that's actually factually correct because I was the first AR person in headquarters.

Nice. And and this is interesting because and and here's the reason why I wanted to talk to you specifically is because you remember what it was AR five and a half years ago in California and cannabis and you know what it is right now. So that that gives us like a lot of um a lot of stuff to talk about. But um you've been collecting money from California cannabis retailers for so and so. What's the biggest difference between California cannabis market when you started versus what it looks like today?

I would say the biggest difference is that now we have some kind of um payment history, payment behavior history um across the state. When when I started it was just process of collecting information about payment behavior and now it seems like that industry is shifting towards uh more knowledge about how people pay if that makes sense.

Yeah. So ultimately the data that we've accumulated throughout the years and the information sort of got us to this point where we're like, "Oh, we know exactly what this person's going to do, when they're going to do it, why they're going to do it, and so on, right?"

Yeah. Yeah.

So when you think about that, obviously the data itself is extremely impactful today. How does this make your job easier? How does this data make your job easier in terms of making decisions when communicating with retailers?

Well, it makes your job easier in um a way that you can do better job prioritizing who you reach out to, how um how often you reach out to them, um how do you approach them, what are their preferences? we basically know a lot more than we used to know. Um so you can save time by um calling someone instead sending them 300 emails they're not going to open because you know that that person or that particular shop operates the way they operate and it is via phone calls or texts. So having the knowledge about their payment behavior and how they used to behave historically saves a lot of time when you um don't shoot blanks. You just um you're straight to the spot. You know when you call them, they're going to pick up.

You're going to have the conversation about payment. it's going to be easier for them, easier for you, and no blanks. Do you feel like there there was an evolution from the point where we're like, okay, my job is just to reach out to people and make, I don't know, 20 calls a day or 30 texts or 50 emails, whatever, to the point where we're right now, which is it's not really based on the number of calls, number of emails, but rather the success of collections per se, per associate or whatever.

Yeah, I would say that um keeping your aging report in order does not mean like it does not correlate with higher number of reach outs if you ask me. Um I think the focus is shifting towards um making better decisions creditwise and that's also where data comes in. So you know who to approve terms to or not.

Mhm.

You're in constant communication with sales. And it's just shifting towards not increasing sales just to increase sales, but have meaningful sales. You put it in a perspective of if we're going to collect what we sold.

Mhm. Um, so all the data, all the knowledge that we have, um, have us being instead of just email spammers to decision makers that's going to proactively make the success rate better by making better decisions before the order actually leaves the facility. Would you say again when you compare back in the day AR with the AR today obviously there's a lot of data that's not only useful for you but as you said like it goes to sales so that they know who to sell to or they're going to be more successful but that again the payments are going to be coming in. So when you compare your initial experience to today were you communicating with sales in the same amount as you are today?

No. Um it was way less in the beginning. Um the departments then back then were more disconnected because it seemed like cannabis was a new industry and that everything was built ground up. Even if there was a lot of experience from the other industries, um we needed to wait for that learning curve to um just do its thing. Um

we needed to wait for the cannabis industry to absorb the the good practices from other industries. And I think that is happening and it's still a process. It's probably going to be a process forever. As much as we take the good things from other industries, there are also some like negative things that we can absorb from other industry like like bureaucracy that we don't need. But it all goes down to the whole system. Like if we're going to have difficult um taxes to look at and we're going to have difficult process to do those taxes, then it's going to cause bureaucracy and and stuff like that. But let's focus on the positives.

like I think that um a lot of um positive things came from other industries and we are going towards more strategic type of doing things in cannabis business instead of doing the like extra work with no strategic impact. And this is this is a a conversation that I had with a lot of people and uh um the concerns versus sort of the positive traits about this sort of cannabis transition to like corp more data oriented industry. Um when you compare it to what it was before which is like literally go and that's it. you don't really plan as you said and uh and it's it's something that a lot of people are talking about right now and I feel like as you said like it is a process it's probably going to take a long time but ultimately if you make sure that you pull out everything that's good do that but make sure you keep the as one of the previous guests said you know keep and maintain the spirit of cannabis which is a sense that that I really like um but going back to data very quickly I want to touch on that as well. Um because obviously as we now understand there is very relevance towards data and it's important to store data.

How does that look like for you? And again give me like a comparison to what it was before versus what it is right now. You know looking at what a typical aging report used to be before and how you look at an aging report right now from you know techwise and data wise and so on and so on. Well, back in the day, it was an Excel spreadsheet where we um were looking at a lot of data that meant something to us, but a lot of data that was just spam like it was just like unnecessary for us at any point. Um, so how the time passed, we learned what to focus on, what we needed to go over, what we needed to actually do our job. So it was structured in the way where we now are looking at meaningful data and we are having a lot of knowledge to to take that data and make it into information and we know what we want to look at every week, what we want to um look at from the strategic perspective. For example, when we are doing reporting and we are discussing um the collection's success with um C-level um people and what we want to look at granularly when we are doing actually our job. So when we do our job in headquarters, we are building the AR dashboard which helps a lot making our a lot of spam data is structured into a dashboard where you can access the correct data points that you need at the time that you need them such as how much is due, how much is overdue, what's the latest update, What's their contact information? What's their um basically um latest event that happened such as payment pickup? You can see how they pay. Um, we can basically use um we can do collections like it's a video game basically like you can navigate through through the dashboard and just look up whatever you need faster and it looks better. So that's something that is involving how how we are evolving as an industry as well

to to put it more in perspective right back in the day you had just like an Excel spreadsheet and that was everything that you were going

yeah um and and now it is this ultra fancy dashboard that has all the data classified stored and then you access it depending on your needs and who you're supposed to talk to, who you're go um to collect money from and so on and so on. So, it's like in a in a sense it is sound versus noise where noise was um five and a half years ago and then now it is actual sound made out of that noise. That is something that you can leverage for real to be more successful at what you do. When you look at your dashboard, you said it was like a video game. Does that mean that you know everyone is able to use it or is it a complex tool? How does that work?

Everyone that's tech-savvy and know what they want to do, it makes their job more organized and standardized. So I think it's having a learning curve of being faster. If you're on boarding with headquarters doing AR, you're going to get up to speed faster with standardized dashboard instead of just using bunch of different spreadsheets that are different with every company in the industry. Going back a little bit to the retailer side, one of the things that I'm assuming your dashboard is doing is it's kind of classifying retailers based on their information you have uh about them. What are the different types of retailers that you're working with? Like if you can put them in boxes, like how would you classify them right now with with the experience that you have?

Well, in the dashboard, you can classify them however you want. um you can customize basically the attributes that you put to the to the retailers. But how would I classify them is um it has to do a lot with their payment behavior. Like do they pay on time? Do they need reminders? Do they like reminders? Um and obviously they are there are the the usual suspects as I call them. Um there are retailers that just pay slower for various reasons which is why we have our jobs as well. But um on the other hand there are um yeah let's focus on the ones that don't pay on time. There is that type that um will just ghost you until they have payment for you. So they will ignore your reachouts. They will they will dodge your calls. They will they will just ghost you basically until they recoup the funds and send you the payment which is when they will reach out to you basically bragging about them paying. Um there are also the the ones that are really struggling. They're ghosting you.

They're not paying. um they're just trying to get an update and my message to them is an update is an update even if it's a negative one.

Um

sorry, let me here for a second. I I have a follow-up question to what you said, which I think is very important to address, especially with brands that are, you know, wanting to make sure that they're making the right decisions in advance and stuff like that. you know, as you said, like projecting a little bit further into the future. Do you recognize now with the level of experiences you have, do you recognize the patterns of like, oh, this seems like a pattern of someone that's struggling or going out of business slowly. Let's just make sure we put a full stop before crazy stuff happens.

Um, or is this something that that's still not fully developed? How would you how would you talk about that? I would say it's not fully developed because I feel like it's still based on what I as an individual feel looking at the data. Um it's not structured in a way that everyone can make the decision. But if you ask me about me, I would say that I know how to to predict that something is off and it's just based on the experience like and also I moved a lot between different brands and I've been working with the same retailers from the

from the perspective of different brands. and their payment behavior is the same towards different brands. So having that knowledge I can see that brands have different strategies when it comes to um providing terms provide um leveraging their exposure to a retailer how much they sell versus how much they collect from a particular retailer. So you can see when someone is risking too much um and it doesn't seem like every brand is let's say managing that risk well enough and that's where the room for growth is in the industry for sure.

So I feel like because you've worked so much with these guys, you know by heart almost sort of fundamentally or sentimentally of when you see these patterns emerge and you're like, "Oh, this is the moment." But you cannot put a number to it. So it's not really technical that much and it's just more based on the feeling that you have in the moment. So what do you think if we were to do an experiment right now and if I asked you put three things that would you know that based on your experience you can you can uh quantify them that would make you a system that can recognize this patterns what those three specifics would be. I will have to think about it for a bit. But the first one that comes to mind would be their payment cadence on average. how overdue their AR gets until they pay on average through time like historically like in the past let's say 6 months um how they their aging buckets move if I should put it that way that we probably the most fundamental one and the most obvious one if we would need to quantify the others it would probably be how responsive they are over time. So we would need to track and kind of grade the responsiveness to the AR outreach if we are just looking at and gathering information from the AR team and not syncing up with other departments uh um in the company.

I use a lot of insight that I can get from sales from the sales reps that that actually visit the shops.

Um they can tell you a lot but that is that is not easily quantifiable. It's more like subject

if you

need you need to to to listen to the rumor mill.

That would be so amazing. I think that would definitely help a lot. Um, but at the end of the day, that's the reason why this is one of those jobs that you cannot easily replace by AI. It's like you have to take these sort of sentimental/fundamental information in into consideration and not just technical value, right? You have to be like, "Oh, but I got information from the sales guys that they're closing and even though it seems like they're paying everything on time, God knows what's going to happen. So, let's just make sure we put a stop to it before it goes out of hand." Um, and that makes sense. Um, so and and then same goes because you did mention that you also worked between multiple brands and you've worked in uh with distribution as well. Um, so I would like to know like if you if you look at those brands, what's something that cannabis brands consistently misunderstand about getting paid by retailers? Because you said that there's different strategies or or approaches when you know get giving terms to retailers. How how do you go about that?

Well, it it all comes down to that um forever battle between sales and AR. And that battle is real. Um every company has um situation where one or the other department has the upper hand and it all comes down to to personnel. like it's like the CFO of the company and the COO need to to be in balance like they need to work together and kind of set the KPIs in a way that makes sense that we need to have more sales but the collections need to follow and The indicator strategically that I like looking at the most is collections versus sales ratio.

Like it needs to be around one. And if it's not around one, some some decisions about leveraging risk as we talked about are not made correctly. So that's the main thing that's that's different across the board. Um if and I understand that a lot of companies have um their obligations towards investors. They need to um increase their revenue. Um it all makes sense to me. But if we're looking at the like theoretical perfect situation, you need to um have the sales that are collectible because in the long run that's the only thing that's important. Like if you pump your sales up at the end of each month at for every month, like you need to to have higher and higher sales and then after like 3 months the the invoices that were on net 30 are 60 days overdue, then you're in trouble. Um, and then you need to address those sales as kind of bad. Like if we did not collect on them, then do they actually make sense? So yeah, that that's basically the the main thing that's different across um different brands that I worked for. There are some that

Yeah. Sorry. Sorry for cutting you off. Uh but but you know me knowing that you swim very well in this sort of relationship between sales and AR, what is your secret to making both parties satisfied? How do you swim through these waters? because you're very good at it and I'm interested in what are how what do you do so that you're not having issues and that the sales guys are actually satisfied with what you're doing but you're also satisfying the need of getting those payments in.

I think it all comes down to trust um for the for the retailers that sales reps does not want me to to touch their relationship. I need to have complete trust that they're going to provide me with updates and that the retailer is not going to go out of control when it comes to to collections. On the other hand, um sales reps need to have complete trust in me that that I'm not pushing credit limits, credit holds on particular retailers damage their sales at the end of the month. kind of over time when you build trust then you work together better towards the the same goal and the my goal is to collect everything that they sell their their goal is to sell as much as they can. There are also practices about bonuses for sales reps where some companies just um hold the bonuses until the we collect money for product sold. So that makes us work for the same interest because as soon as we collect they're going to have their bonuses and apart from that trust that we are trying to mutually build. I think it all comes down to that as well. But yeah, as you said, you need to swim in those waters and just over time it feels naturally to me that it is going towards a good outcome. Um,

and yeah,

it's like making sure that you're a good mediator by doing or by convincing sales that without them selling, you don't have anything to collect. So ultimately, your goal as well is to make them sell as much as possible so that you can collect. Um, which is probably something that sales guys should take into consideration as well. All right, last one. And this is something that I really like talking to people about. It's just because it's a bunch of information that I mean, you know, it's just forecasting.

But tell me, what do you see or how do you see California market in three years from now?

No one has issues with having a bank account. They're making a payments and it's clearing automatically via blockchain and I'm out of my job. But realistically, I don't think that's going to happen. Yeah.

Um real realistically, I think three years from now, it's we're going to make progress towards um quantifying the indicators that we talked about.

It's going to move more towards leveraging the risk and making meaningful sales. But I wish that um cannabis industry as a whole is going to have more access to capital. It's going to have more access to banking um like kind of factoring capital for their cash flow to be faster. I would like to see that moving in a positive direction 3 years from now.

Thank you very much. Where can people find you? They can find me in this spreadsheet probably and in the AR dashboard.

Thank you very much. Have a great rest of the day, evening.

Thank you. Really enjoyed it.

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# The Shift, Ep 8: Marketing Cannabis at Scale

URL: https://www.tryheadquarters.com/podcast/ep8
Guest: Josh Karchmer
Summary: Former Glass House Brands VP of Marketing Josh Karchmer on treating marketing as the connective tissue of a cannabis company - budgeting from zero, cutting the waste that quietly kills margins, and why storytelling and brand trust win in an AI-flooded market.

Transcript (auto-generated, lightly edited):

just been knocking around in California cannabis since 2018. Um my first job was um Mo with a company called Moxie who are you know a concentrate and and vape company that were operating in four states. One of the co-founders used to work for me um in in advertising. So I ended up following him into the business in 2018. Um I'd been smoking my whole life, but I never really understood where I would fit in the industry. So it was like we sat down in 2018 was right after it went rec. We talked for like four hours. Billy Maddox who used to be at Moxie and um and at the end of that conversation I saw where it was going. I like this going to be a a CPG business.

They're going to meet people who can create brands and connect brands and culture and tell stories. And so that moment like I made that decision. I shut down my agency. I'm like, "Okay, I'm going to go spend the rest of my career, at least next chapter of my career in cannabis." and um and specifically building rec brands and so you know I did it I was in Moxie for a couple years then I went and consulted on a bunch of other bunch of small brands and I went to high season got to create high season and gratitude and that was the first time really controlled supply chain we had had my own cultivation or the company did um and learned so much through that and then you know I wasn't looking for a job but glass house came calling and that was like an opportunity to go to the big leagues really like, you know, it's as close to the NFL as you're going to get to go run uh, you know, House of Brands with a big publicly traded company and be responsible for storytelling, not just for CPG, but like I make the investor videos, too. So, like a lot of, you know, pretty much all the storytelling like that, a lot of that came through came through marketing. So, it's just like the cool thing about cannabis was it was just a place to take everything I've learned from 20 years of marketing and music and and in advertising and then go apply it like within a product company. And um it's just been it's been a blast. Like um I've done a lot of cool things in my life, but like my cannabis experience is, you know, something I treasure the most. So you believe that marketing shouldn't be viewed solely as the creative department. And if marketing is actually the connective tissue of a company, what does that look like in practice in inside a cannabis business? Pretty much.

Yeah. My my whole philosophy on marketing is that marketing is really everything you know everything is a marketing uh everything from your product you know all the five Ps of marketing the product the price you know where we sell it distribution strategy um promotion storytelling um and people is a huge part of marketing um or a huge part of business and marketing's job is to create the stories the energy the the tools the events the, you know, everything you need for that business to run well. So, it's what that looks like in practice. We could, you know, look specifically at Glass House. I'm coming off of three years where I ran marketing at Glass House, which is, you know, um, one of the biggest publicly traded companies in, you know, in the business.

And our business was a lot bigger than brands. So, you know, if you think about the whole organization, it wasn't just marketing for the the narrow version of um just CPG brands. I'm looking at an organization where the business is dependent on the farm doing well. The farm is the biggest piece of the business. And then we have um the house of brands, you know, Glass House, Allswell, Mamasu, Reform, and we had retail.

So, we're completely vertically integrated and we supported um the retail marketing as well. So, you know, uh what that looks like is a small team that partners throughout the entire organization to move the business forward. Um so you know as the vice president of marketing I I sit in the leadership or I sat in the leadership team with head of sales revenue um retail data you know all of the the VPs and SVPs um who really run the business and you know everything from marketing strategy to product and portfolio strategy um all the there's a lot of things that happen before you know what people think is marketing which is taking it out to market um before you can do that you really have to understand your business, what you're trying to do, um, and develop a strategy that supports that.

Got it. That's that's actually I love that because now what I'm trying to understand is like you share this situation or your view of marketing as as what it is. And now I'm thinking because you gave this picture of like I'm sitting in a room with, you know, a bunch of these people. How does how does Josh prioritize who's he gonna pull first? Who's uh notes he's going to take in? What are the priorities of the company? How do how do you specifically prioritize when you when you think through marketing perspective?

Yeah. Well, I guess it's really understanding what you know what the business is. Where does the revenue come from? You know what's the you know in this business like certain you know a lot of the revenue came from cultivation. So the the you know we're not spending money to market to cultivation but we're certainly creating training materials and and and you know um teaching people and partnering with the farm and HR to do that. Um the goals for the CPG and and retail is you know understanding that um and also helping connect the dots. If we have the biggest farm in the world we should also have the biggest flower portfolio in the world. So that was, you know, part of what we built, which is making sure we got the right products at the right price. Um, portfolio strategy. Um, a big part of marketing, too. It in my strengths from, you know, 20 years of marketing before I got to cannabis. Um, and a lot of operational experience in cannabis, a lot of it is figuring out what's absolutely necessary, like what should we be spending money on, what do we prioritize? And I always like to, you know, start from never take a a big budget and and break it out. I always budget from zero. So you you know you start at the beginning figuring out like let's look at the product right like do we have the right product does you know um a lot of what I did was I you know I did rebrand glass house and actually really changed the look of all of the brands um fixed a lot of things in the product um you know is the number one selling flower brand in California um it became that during during my tenure there when I got there it didn't look like it does now and all the relevant product information that customers and budtenders need was on the back of the package. So, it would merchandised upside down. So, that's just like an easy one. It's like, oh, okay, we need to go redesign this, put everything that the customer wants on the front, maybe give it a look. Um, and when you see now, it's got beautiful blue color. You walk into dispensaries, it's just, you know, just punches you in the face. And before it didn't look, yeah, it was I cringed when I saw it earlier. there's this like weird primary colors and you know everything the customer wanted was on the wrong side. So you know what do you prioritize? Yeah, I mean it really comes down Yeah. It comes down to revenue goals um sales and marketing working together to try to figure out okay what do we got to do this quart you know where are we going this year and what do we got to do this quarter to get there and um yeah a lot of it is rationalization like we don't have to do everything we don't have to be number one in everything. Um so you know in the first 6 months we did a lot of portfolio rationalization killed brands off um and really tight tightened our focus to go win where it made sense to win.

You did mention when when you start working you start off with like the the easy budget or almost no budget. So a lot of operators see marketing as an expense let's say. What metrics does marketing need to own before leadership starts viewing it as a revenue driver instead of a cost center?

Um well I I think that you know marketing should should share a bunch of metrics with sales you know um especially in CPG I think um distribution and velocity should be shared sales and marketing because then you're building a marketing strategy to go attack the problem. um awareness. Well, think about it like this. In a in a rec market like California, you got maybe a thousand stores, right? So, there's only a thousand customers.

They're not all people that you want to sell to. So, if you're going to build a brand, number one thing is, okay, who are we going to sell to? Like, what shelves are, you know, who do we want to build partnerships with? Who can pay their bills? Who, you know, where can we build relationships and drive velocity? So, if I'm building marketing based, oh, I'm going to go throw this great party and we're going to go get this influencer and that. If that doesn't actually bring somebody to one of those stores that your product is actually in, it's, you know, it's for your ego. So, like I don't market out of ego, I market out of how do we solve the problem. If we're trying to be, you know, if the goal is to have the number one flower portfolio in California, it's do we have the right products? Are they priced properly? Do budtenders understand the story enough to tell them? Do we make it easy for consumers? Um, and then, you know, ruthless trade marketing. So, you know, I think in cannabis we don't have big budgets.

Even a big company like Glass House, you know, I spent, you know, a fraction of what my predecessors did because a lot of it was waste. If we look, there was a lot of a lot of wasted money spent on things that don't actually move the business. C can you be more specific? And again, I understand if you know there's there there's not really room for that. But when you say waste, give me an example.

Can you give me an example? Yeah. I mean, a lot of places that cannabis companies waste money. Um outsourcing creativity. So, you got to ask somebody else to, you know, what is my brand? What what should we be? You're you're in the wrong game. So, I' I'd rather invest in people rather than outsource creativity. I want to have a strong team and be able to do that. So doing as much in-house as possible, you know, you want to outsource certain things that you don't have strengths in. Like I would outsource, you know, accounting or, you know, or like things like that, but I wouldn't outsource like my the essence of my brand. Um, so it's that also a lot of people waste money in packaging.

There's tons of waste in custom packaging. um extra touch points that add you know your COGS in a product won't make sense if you're overspending because you got to have this QR code and maybe that QR code cost you 12 cents by the time you know by the time you're done and if it doesn't add that value to the consumer then it's it's a waste. So, um, a lot of it's just rationalization, getting rid of things that don't make sense. Um, figuring out what the consumer actually wants. Um, and focusing on that. Um, I would say the only channel that you really like if you if you have to spend money, if I was going to spend money in a single channel, it'd be trade marketing and that's it.

I wouldn't I wouldn't worry about events. I wouldn't, you know, I'd make content in-house for free. Um, and I would focus and trade because that's the money that's going to actually um market as close to the consumer as pos possible and move product that way. Let me let me quickly get back to the the u the conversation about the packaging because this is interesting to me. Um, h, so how does a brand stand out with not so much personalized packaging, but like or how do I say that you don't have to go that extra um personalized packaging system that's more expensive as you said as a as a waste. How do you stand out from a creative perspective, let's say, by not really going uh that extra mile in terms of spending money for packaging, but making it really, you know, stand out and and get attract.

Okay, do this. Um, so I mean this is this is obviously oversized. Uh it's a the real bag is not this big. But um you know the whole idea with with glass house was jars are expensive you know and and so when I got there um we weren't really selling big we weren't selling big flour in everything was in a jar. So going moving to Mylar bags which are which are more cost effective than than a uh you know than a jar. Anyway, if you especially in flower like the customers that we care about the most are the the high volume customers, it's the the packaging is a waste item.

So, you know, if I smoke an eighth a day, I don't need 300 jars. Like, what do I do with 300 jars at the end of the year? It's a waste. Um, so, you know, we move we started moving everything into, you know, lesser expensive packaging. And, you know, I take a bag home now. I rip the top off and I pour it into my mason jar. I just keep reusing mason jars, right? So the be like investing in a jar for every eighth is to me is kind of silly. Um you know especially on the low with price compression on the lower end but in terms of how do you stand out on the shelf like when I redesign glass house didn't always look like this it black package before but the thesis of glass house is that you know and the thesis is that the world wants California cannabis right not just glass house but everywhere. And so that's why I I went to this company. We were going to be the biggest grower. Um and I was like, well, let's the game I was playing for. Um I didn't see Schedule III happening the way it did. I was hoping that we'd get to, you know, um you know, uh descheduling and that we'd be, you know, be treated more like alcohol. So when I designed this, I'm thinking of like if I'm going to walk into a 7-Eleven in Omaha, you know, and want weed, I don't think the question is going to be indoor/outdoor greenhouse. it's going to be California or not California. So, you know, when we did this, it was let's just own the California positioning. Um, you know, award-winning California cannabis flower. So, that's so I think you do it with you don't need to send it in. It's not expensive packaging. It's just a, you know, it's a Mylar bag. Just smart branding. Um, that didn't have a strain sticker on it, but all of the information that the customer wants is right is on the the label on the front of the bag. That's a marketing function.

We designed the label to um give you everything you want. So, I'll put flavor notes on there, dominant terpenes, you know, in addition to everything that that uh that's required to be on there. Um and in past brands, uh the brand I came I was at before Glass House, I was putting harvest dates on the package and I created a system. I I had I got rid of indica/sativa/hybrid alto together and created I had a brand called high season and I built the product portfolio around flavor profiles.

So I just took you know we're growing a lot of you know all the cookies and cake strains were in one color way. All my purple weed was in a color way. Um OG's and gas strains were in a color way. So that was an easy way for people to understand oh okay I like these type of strains. Another thing that you did mention which is extremely important because obviously headquarters does outsourcing with a bunch of different um business options whether that's like accounting or AI or whatever. Um but what I also wanted to touch on as well which is like besides outsourcing we obviously now do have a lot of AI and um everyone is talking about AI automation and data um yet you said stories and people matter more than ever. Why do you think brand trust is becoming more valuable not less in an AI-driven world?

Well, I just think that in an AI-driven world, you can already see it like AI is making everything look really homogeneous. Like everything's the same. You know, if people are, especially people use AI for generative things. Like if you if I flip through my Instagram feed right now, ChatGPT, like you could tell and I think people already like tune that out. Like I just I wouldn't take Nike seriously if like it was like, "Oh yeah, you just that was cloud design and you built it in HTML." How do I use AI?

Um I use AI to clarify my own thinking and to communicate better. So, um, a lot of it is just I can I can create a stronger brief through AI because I can go work through all the problems and then by the time I finish it, I can go hand a collaborator something that's crystal clear like here's what here's what I want you to do because I've already beat it to death, you know, with my AI for 30 minutes. Um, you know, you especially when you know you have to massage something to really get what you want with AI and and I can work that out with AI before it gets too human because a human can't take that level of criticism or you know what I mean? Um, or like if I want to iterate a hundred times, I will burn a human being out and I do that with the machine, get it here and like, okay, here's the demo. This is what we're building.

So, I don't know. I'm able to get get things to Yeah. places where it's e easier for people to understand what what we want. Um, and keep things organized. Going back to obviously a huge experience that you have and um not just the the quantity of the experience.

If you were stepping into a cannabis company today, um, as a chief marketing officer, what's the biggest marketing mistake you'd fix in the first 90 days? And I'd like you to give me concrete like what is based on your experience, what you've saw, you step in, what are the first things that you do. First 90 days at a cannabis company, um, in the first 30, you just immerse yourself. Like don't have opinions. you learn, get plugged in, understand what you're getting into, understand your team, assess the talent that you have, see where gaps might be. Um, and also just understand is everybody there? Do they get do they get it? You know, do they want to be here and can they do it?

And if and if they can't, then you got to make changes. So yeah, I think it's assessing team, assessing situation, understanding the business, getting a really good look under the hood, understanding your numbers. So sitting with people in data, sitting with people in ops, accounting, um yeah, to kind of really understand what you're playing with, getting into the field, too.

So CPG company being going to stores and talking to budtenders and buyers about your product and and understanding, you know, you can see where you're at. You can figure out, do I have a problem with my my product? Is my positioning right? Are we p, you know, where where are we not aligned? Um yeah, just you have a fuller before you can really add value, you have to understand what you're what you're doing. And if you come in and have an idea on day one, like that's ego, you know.

Yeah. Uh yeah. So you try to just like really suppress that as much as possible in the beginning. Got it. And remove the glass jars. Uh I mean or just put the focus towards things that are the higher margin, you know. Um but yeah, I mean some of the Yeah, some of the product decisions that made like I didn't I didn't go to this like I didn't do this I didn't start this till after I've been there like well over a year because it the packaging wasn't really the problem. It was like the storytelling was the problem with Glass House in my opinion.

And so you know it was really like first goal with that was just let's humanize it. let's humanize the company, tell people it's, you know, you can't hate people that grow weed or we're passionate about weed. So, that was that was one of the first things there with Allswell. It was like understanding that the, you know, that was the first package I changed, but the just the labeling um understanding like what you're getting into and and where the opportunities are.

For me personally, this was a lot of information that I was not uh familiar with. So, really appreciate that and thank you. Um and uh if if you can uh share with us where can people find you on social media? I am uh LinkedIn. Um I think it's just Karchmer K A R C H R is my my handle there.

Uh Josh Karchmer um or on Instagram Josh. Karchmer and uh or events in California. Um I'm around. Say hi.

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# The Shift, Ep 9: The Cannabis Shift: Stop Waiting, Start Building

URL: https://www.tryheadquarters.com/podcast/ep9
Guest: Filip Gacic
Summary: Host Filip Gacic breaks down three signals shaping cannabis: why DEA rescheduling keeps dragging on and what operators should do instead of waiting, Germany's quiet rise into a pharmaceutical-grade powerhouse, and the widening split between consumer and pharmaceutical cannabis.

Transcript (auto-generated, lightly edited):

If you've been following the cannabis industry over the past few years, you've probably heard one phrase more than any other. DEA rescheduling. Every few months, there's another headline, another hearing, another prediction that this is the final moment. And yet here we are still talking about it. Now don't get me wrong, this is an incredibly important story. So why is it taking so long? Does the delay itself tell us something about this industry? According to Business of Cannabis, the DEA officially opened administrative hearings on June 29th to consider moving cannabis from schedule one to schedule

three under the Controlled Substances Act. Now, that sentence may not sound exciting, but it's actually a pretty significant moment because for decades, cannabis has been classified alongside substances that under federal law are considered to have no accepted medical use and a high potential for abuse. Moving cannabis to schedule 3 wouldn't legalize it federally. It wouldn't suddenly make recreational cannabis legal across America, but it would recognize a very important distinction that cannabis has accepted medical uses under federal standards while remaining

a controlled substance. Now, here's where the story gets interesting. People hear the words DEA hearing and they immediately think, great, this is almost over. But is it though? Because government processes, especially ones involving multiple federal agencies, rarely move quickly. And when you're talking about something that affects healthcare, banking, taxation, research, law enforcement, and an industry worth billions of dollars, it's probably supposed to move slowly, whether we like it or not. According to researchers at the drug enforcement and policy center at the Ohio State University Mortz

College of Law, the recommendation to move cannabis to schedule 3 followed a scientific and medical evaluation by the Department of Health and Human Services, which concluded that cannabis is a currently accepted medical use under the Controlled Substances Act. Now, think about that for a second. That's not coming from a cannabis company. This is not coming from an advocacy group. That's referencing the federal scientific review that helped start this process. But here's the question I keep coming back to. If the science has been reviewed, if the recommendations have been made, why are we still having hearings?

Well, because science is only one part of public policy. Law is another, politics is another, procedure is another, and all of those things have to work together before a decision like this becomes a reality. Now, what should operators actually take away from this? The cannabis industry has spent years waiting for one medical headline, one announcement, one government decision that's supposedly going to change everything overnight. But successful businesses don't operate that way. They don't build their strategy around what regulators might do six months from now. They build around today's reality. They focus on

profitability, operations, customer service, inventory collections, compliance, the things that keep a company alive regardless of what Washington decides next. So what's the shift? The shift is this. Regulations create opportunities, but great businesses aren't built by waiting for regulations. They're built by executing every single day. And that's a lesson that applies well beyond the cannabis industry. Now, what's happening across the pond? Well, Germany is quietly building something very different. And honestly, I don't

think enough people are talking about it. If I ask someone to name the biggest cannabis market in the world, most people will probably say California, maybe Canada, some might even say New York. But if we're talking about where the biggest opportunity may be over the next decade, Germany deserves to be in that conversation. In an article titled Canopy Growth Builds European Cannabis Momentum, the company is continuing to expand its European strategy with Germany at the center of that expansion. The report explains that Germany's regulated medical cannabis market has become a major focus because of expanding patient

access and an increasingly mature pharmaceutical distribution system. Now, is Canopy Growth the story or is it Germany? Because one of the largest cannabis companies in the world decides to prioritize a market. People should ask why. And here's another interesting point. According to newsfeed citing figures released by Germany's Federal Institute for Drugs and Medical Devices, Germany imported more than 50 metric tons of medical cannabis in just the first quarter of 2026. That's a remarkable volume for a market that many people still describe as emerging.

Think about that for a second. That's not hype. That's supply. That's logistics. That's pharmacies. That's patients. That's real business. And I think that's the biggest difference between Europe and the United States right now. Because in the United States, the conversation often starts with politics. Who's going to legalize next? What will the DEA do? Will Congress act? And in Germany, the conversation is increasingly becoming, how do we serve more patients? How do we improve supply chains? How do we meet pharmaceutical standards? That's a completely different mindset. There's another reason this matters. And companies aren't investing millions of

dollars because they expect one good year. They're investing because they believe this market will continue growing for many years. Markets don't attract this level of investment by accident. They attract it because businesses see stability, predictability, and long-term opportunity. So, here's a question I'd leave you with. Is Germany simply becoming Europe's biggest cannabis market or is it becoming Europe's cannabis business hub? Because those aren't necessarily the same thing. One sell one sells products, the other attracts companies, investments, talent, innovation. And if you ask me, Germany is starting to look

like it's doing all four. Could it be the next global leader in cannabis? May not be the country making the loudest headlines, but the one quietly building the strongest foundation. I'll leave you with that. All right. Pharmaceutical cannabis. And I know the moment you say that, some people immediately tune out because it sounds technical. It sounds medical. It sounds like something happening in laboratories, not in the real cannabis industry. But I actually think that's wrong because this week we saw a story that tells us something very important about where cannabis is going. According to Globe Newswire, Beverage Group

acquired exclusive global rights to Cannepil, a cannabinoid-based epilepsy therapy with existing patient access in Europe and potential US development. Now, let's pause there because the interesting part is not just the company. The interesting part is the category. This is not a lifestyle brand. This is not a celebrity pre-roll. This is not another beverage trying to look cool on the shelf. This is a cannabinoid-based medicine being tracked like pharmaceutical intellectual property. And that is a very different category. According to MG magazine, Cannepil is described as a proprietary cannabinoid-based investigational

therapeutic for drug-resistant epilepsy and the licensing agreement was made with Argent Biopharma. That matters because when cannabis moves into pharmaceutical language, the whole business model changes. You're no longer talking only about branding. You're talking about clinical pathways, regulatory approval, patient access, manufacturing standards, reimbursement, data, and intellectual property. That is a completely different level of seriousness. Now, investing.com reported that Cannepil is approved for distribution in Ireland, the United Kingdom, Germany, and Australia,

and that it is manufactured under European Union good manufacturing practice standards. Again, listen to this. Ireland, the UK, Germany, Australia, EU-GMP standards. This is not the old cannabis conversation. This is not when will legalization happen. This is how do cannabinoid therapies fit into modern health care systems. And that's where I think the industry needs to pay attention because there are really two cannabis industries developing the same time. One is consumer cannabis brands, retailer, flower, vapes, edibles, beverages, marketing, customer loyalty, and the other is medical and pharmaceutical cannabis. patients,

doctors, clinical evidence, regulatory agencies, pharmacies, insurance, and long-term treatment pathways. Both can exist, but they are not the same business. And if you try to analyze them the same way, you'll miss the bigger picture. According to RT News, Splash acquired worldwide rights to develop and sell Cannepil for drug-resistant epilepsy and related neurological conditions with an initial 20-year license term. and sublicensing rates. So, does that tell us something? This is not being treated like a short-term product launch. This is being treated like a long-term pharmaceutical asset. So, for years, cannabis companies wanted to prove that cannabis could be a serious industry.

Now, some parts of the industry are moving into a space where seriousness is not optional. You either meet the standards or you don't. And I think that's healthy because if cannabis wants to be taken seriously in medicine, it has to operate like medicine. That means evidence, standards, consistency, patient safety, regulatory discipline, not hype, not slogans, not trust us, actual systems. So what's the shift? The shift is cannabis is no longer moving in one direction. It is splitting into categories and pharmaceutical cannabis may become one of the most important ones. Not because it's the loudest part of the industry, but because it may become one of the most credible. I think this is a good

one to end today's episode. Um, thank you all for watching. Uh, have a great rest of the day and I'll see you on the next one.

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# The Shift, Ep 10: Why Cannabis Needs Quality Signals

URL: https://www.tryheadquarters.com/podcast/ep10
Guest: Claudio Miranda
Summary: Budist COO Claudio Miranda breaks down why cannabis lacks the quality signals - ratings, awards, origin - that guide wine and coffee buyers.

Transcript (auto-generated, lightly edited):

So Claudio, can you tell me a little bit about yourself, please? Cool. Well, my name is Claudio Miranda and I am the COO and co-founder of Budist. We're the cannabis industries's uh leading and first ratings and review platform. You know, we started as a kind of review platform, but have developed, you know, further into competitions, curated events. We also do a lot of expert content. Um, I've personally been in the cannabis industry um, my whole life, not not continuously, but uh, over 40 years and I got my start really as a teenager. Um, you know, actively involved in the traditional market and did that through the mid '90s and really, you know, learned how to cultivate cannabis and and do things of that

nature in the mid '90s here in the Bay Area where I'm from right now. And that was at the birth of Prop 215 for those familiar with the history of California cannabis and and and reform and regulation. Um but I got out of cannabis for about 15 years and I jumped back in um around 2013–14 into the licensed market and since then mostly in California I've owned and operated every license type in the state with the exception of lab testing. So I've owned and operated retail stores, uh, large scale cultivation and manufacturing, distribution, delivery. So I've been very very active on the kind of license holder side, operator side. And more recently with Budist, I've kind of flipped to the other side of the table to then help a lot of the brands and the license operators tell their stories in

market and to spotlight exceptional products and producers. You did you mention you were out of cannabis for 15 years? Is that Did I get that right? What were you doing? Um I got into mostly like tech and natural products, but really natural products. So that means like organic products um things of that nature. You know, my you know, I've been an entrepreneur for over 20 years. The first company I started was uh the um the nation's first sustainable fresh cut flower company. So my business partner and I basically um pioneered the market for sustainable floral as it's called and that's fresh cut flowers, right? What you go to the store and buy roses for Valentine's Day or tulips for mom for Mother's Day or all the different reasons you buy flowers for sympathy for funerals all those things. And at the time when we started our company, the

market was dominated by FTD, you know, um, ProFlowers, Teleflora, all conventionally grown. And if you're familiar with how that agricultural market works, it's very pesticide-heavy because you got to have these beautiful flowers as your output. Um, and we went and tried to reform that through agricultural production and really making sure that all these farmers were using sustainable and organic uh, farming methods to produce flowers. And then what we would do then is turn that around to consumers who made values-based purchasing decisions, right? people who buy organic products and services or or natural or or sustainable products like go to a whole foods store to buy organic milk organic produce. It's that customer that you know stands for the environment and

and and for personal health that then is the customer that kind of would buy from us. So anyway, that started a journey in the organic products industry where I launched several companies in organic um floral, organic bed and bath, organic apparel, a variety of different products. And the technology side is that we primarily sold those products direct consumer, you know, through e-commerce, but then we also wholesaled to a lot of natural product stores as well. What when was the moment that you were like, you know what, I want to get back to cannabis? What what happened? So, you were like, I want to get back to cannabis. Yeah, it's a good question. Um, so I mentioned I'd been in cannabis really from the time I was about like 15 years old, about like 25 years old. I was in it for like a decade as a teenager and through college. I paid my way, you know, I went I went to school at UC

Berkeley and I paid my way through school cultivating and and basically distributing cannabis. Um, and I got out of it for the reasons I mentioned. Um, and when I exited my last organic products company, I was looking for the next thing to do, like most people do in that situation, I started to consult. I sat on a few advisory boards. So, I was kind of floating around kind of looking like, okay, what do I want to do next? And through that process, and I was mostly consulting for income at that time. And what I ended up doing is like meeting um some folks that were in the licensed market and they're like, "Hey, we love your help with uh some of the services you offer." And I was doing a lot of like technology implementations, marketing services, building websites, things of that nature. And long story short, you know, again, I met some folks that were in the licensed retail market in California.

And through that process, I'm like, "Hey, that I I know cannabis really well just through like culturally and in my lifestyle, but I never really connected the dots with what I was doing professionally, right? So, I found that that was a great opportunity. It was a personal love and passion of mine again as a lifestyle decision. And I was able to marry that with my professional background and everything I'd learned working in technology and natural products. So I applied all of that expertise, that knowledge uh to then building cannabis companies. And so I started on the retail side uh managing retail stores, dispensaries and then ultimately I I launched my own with a group of partners. So, it's a very good set of skills and a very good set of experiences that sort of organically got you into cannabis because everything

of, you know, everything you've been doing before. So, it it completely makes sense. Um, that's exactly right. Yeah, it was very organic. It wasn't like I had some vision to go in and be some kind of cannabis entrepreneur. It just kind of really happened naturally. Yeah. Do you see a world where buyers are actually using your tool to inform their purchasing decisions for new products or strains instead of relying on what a brand rep is telling them? So, this is a little bit more into the weed of it, a little bit more specific. No, that's a fantastic question and the short answer is like absolutely yes. It's already happening. And here again, you know, we're not reinventing the wheel. You know, if you look at analogous industries and businesses like the wine industry, right? It's very common practice. It's very institutionalized that whether you're a wine buyer, like at a retail store, or

you're a wine consumer, like a buyer as in a consumer, you often rely on things like quality signals, right? That are things like awards, right? So often times if I'm going into a retail store, if I'm a retail buyer and I'm looking at some products uh to carry, um you're kind of looking at these quality signals that in some ways go beyond what the story is of the brand, right? And the family and things like that. And those quality signals could be things like awards, right? Like this won gold medal at the state fair or at this or that competition. It could be ratings and reviews in wine. That's very common place. Anyone who's ever walked into a specialty wine store will likely have run into ratings that are next to the wines. So it will be like this Cabernet is 94 points by a well-known critic that

works for a publication like Wine Spectator or Wine Advocate or Vinous. So you find that globally. It's not just like an American thing. No matter where I go in the world, I can find uh ratings that go along with with wine in this example or things like awards, right? And and by the same token, and again, these are quality signals, you find things like shelf talkers that speak to like the origin, right? It might be like this is from Napa Valley, California as a geographical origin. That gives that then confers upon that product a sense of quality because of where it comes from. If you know your wine comes from Burgundy or Bordeaux, you can be like those are known for high those are high quality production regions. So there's already something there that informs the buyer that I'm getting a quality product. So what it really does then

these quality signals as we call them directly inform purchasing behavior because it helps buyers again whether that that's a consumer or a retail buyer really navigate which products are better than others. And the last thing I'll say about that is that there's a lot of studies that for consumers, if you walk into a supermarket and let's say you have 30 different Cabernet uh brands to choose from that are roughly they range from 20, 30, 40 bucks, like what do you buy, right? Most people would default to buying on price point or maybe the label, the aesthetics of it appeals to them. There's a story there. But what most commonly drives that purchase is they'll see that rating or they'll see that award. So if you saw 20 bottles of Cabernet and let's say they

were all roughly the same price, but one of them has a gold medal on it, like a little sticker or placard that says gold medal, triple gold medal, or it said 96 points from like a top wine critic. From a purchasing behavior perspective, uh, consumer behavior shows that you're more likely to buy that product because now you've got like something that validates and gives you more confidence in your purchasing decision. So, but is doing that for cannabis, whether that's an award, whether that's a rating or review, whether that's highlighting the geographical origin like Emerald Triangle, Humboldt as the origin of that product. A certification has a similar effect that tells you this is certified organic, certified fair trade. All of these things go under the umbrella of

quality signals that inform purchasing behavior. And although this is used in every other of these other markets I'm referring to, coffee, cheese, beer, wine, spirits, cannabis has not yet adopted this or institutionalized it as a practice. Although it's proven to work in other industries and it's through that model that we gave birth to Budist knowing that if it works for all these other industries it's probably going to work for cannabis and we're already seeing that proven out by the retailers and the buyers who are starting to utilize um our Budist assets and services in this capacity. Are there any differences like big differences crucial differences that you're observing or no? Well, if I understand the question correctly, like if we compare it to alcohol, right? Whether that's wine, craft beer, spirits, um most of those

reviewers, they don't review the effect, right? Like usually they're reviewing the quality from things like aroma and flavor and texture and richness and the vintage and things of that nature. You're not like, "Oh, how what was my buzz off that wine?" Like, was I a happy drunk or an angry drunk? right? Like that that's not part of the kind of uh the assessment criteria. Whereas with cannabis, that's a significant component of the assessment criteria, especially when you're looking at wellness products because for for most cannabis consumers, you're consuming to um for a desired effect, whether that's uh to help you go to sleep or alleviate your pain or to relax. A lot of people use it as a substitute for like instead of coming

home after a hard day's work and pouring a glass of wine or or or a glass of whiskey to kind of wind down, a lot of folks use cannabis for that wind down. So, it's desired effects, right? And then by the same token, a lot of folks are using it for uplifting, for creativity, to go on a nature hike, for inspiration, and and things of that nature, right? So there's all these effects, the most profound of which are medical and therapeutic effects, but there's also recreational effects that we um analyze carefully and assess as part of judging as part of judges in the case of competitions or in the case of reviews for critics. If you had to audit a cannabis company in one day, what are the first three things you'd ask for before deciding whether they're being

run well? Yep. Yep. I mean, primary, look, I'm kind of a marketer by trade. Brand marketing is what I've done for most of my life. Um, if I'm going to kind of put that label on myself, but you know, one thing we find a lot in the marketplace is a lack of differentiation. It's kind of, you know, and just in in entrepreneurship in general, we say, um, why are you bringing this product or this brand into being, right? Does anybody care? And it's a common thing. It's a common mistake that entrepreneurs do is we create things that people don't want, right? And so, you're always kind of asking yourself like, like, what is it that's unique about my offering that's going to get a consumer, a desired customer to care and to buy from me? That's kind of one thing. like why should they buy anything from me, right? And the onus is on me to create value

and to deliver that value and to win that customer support. But then also how do I differentiate from other products in the marketplace? And so going to the question here is a lot of cannabis companies and I've consulted with a lot of them. I've worked at cannabis incubators where we where we kind of help companies capitalize them and help get them off the ground. And it's a primary thing that I teach. It's like you got to really go back to like your your reason for being your why and like why am I putting another cannabis product out there because we know especially in the more saturated markets like California there's just no shortage of flower or another vape pen another like you know another 90% vape pen made from distillate that has a strawberry flavor whatever right there's just a sea of undifferentiated products and what

happens when you get that saturated market, your only thing you can really compete on is price, right? Because then it's just like, hey, I'm no different from the product or brand next to me, so maybe I can just sell it to you at a better price or I can give you a better discount. I'll get you a buy one get one free or I'll get you a 20% off. And that's precisely what we're seeing in in the cannabis marketplace. It's called a kind of race to the bottom pricing that has led to this phenomenon called price compression where just everyone's racing bottom you know bottom pricing right and that's because you have nothing else to differentiate on. So that's another reason why we created Budist is to say look Brands, you've got some other things you can hang your hat on the story of the farm of the family of the producer of the cultivar unique genetics the

region in which the appellation in which it comes from maybe there's something unique in your formulation like you've got to really be thoughtful as to what are the unique qualities of my products and what is that key differentiating factor it's Always great to have something new and innovative as well that no one has done before. That's a little bit harder to pull off. But if you're able to do that, then you start the race much more successfully cuz then at that point you're getting into just operational execution among other things. But that tends to be more routine, right? If you got smart people that know how to sell well or how to run operations well or customer service well, that tends to be a little bit more of a commodity in the market. Whereas what's not as commoditized is knowing how to create a great product that that will really resonate with an audience

and that they'll love that is unique that's hard to replicate and that's what you should be focused on first and foremost as a company is creating that uniqueness in the world. Either that or you just go all in on the commodity play and be like I'm going for mass scale. I'm going to be the Budweiser. I'm going to be just I'm going to be the low price leader. My unique quality is I'm just going to scale. I'm going to be the biggest at what I do at the lowest price. And that also requires a lot of skill. But that's all that's really hard to do because there's usually only a small handful or two or three players in the market that the compete on the Amazon level or the Budweiser level, right? Everybody else has to figure out the differentiation game, which is why I emphasize that. Do you feel like maybe the the the sort of um base differentiator in the future might be

genetics themselves or do you feel like it's going to be something else? For sure genetics will be a big part of it. 100%. I think that's something that's always kind of been there in cannabis. And you know, not to keep kind of tooting my horn at Budist, but but what's been lacking are the platforms and the people that help translate all this wealth of genetic diversity over to the consumer because the average consumer, they know indica sativa hybrid, right? That's about as far as their knowledge goes. They might know an OG. They might know a sour diesel and some of the kind of common, but when you really get into the the broad taxonomy of of cannabis genetics, it's like wine, right? It's like all the wine varietals, right? It's just it's just a lot there. So I think that absolutely it's important but it's only going to be

important to the extent that there are folks like Budist and we're we're not alone here educators journalists other folks in the ecosystem that help translate that universe of genetic diversity to consumers in ways that they can understand and familiarize and help make better purchasing decisions. But the short answer is absolutely genetics is key. The other key factor that we're really kind of uh looking at along with others is you know is origin right uh geographic origin. And there again in wine and coffee and fresh cut flowers and cheese and like all these industries and spirits origin is key. Right? If I'm going for coffee I'm going for Ethiopian or Kenyan or Guatemalan. Right? If I'm

going for cheese, I'm looking for that French cheese or or something maybe in Northern California, right? And cannabis is the same thing, right? So celebrating that and the and the coupling of that, if I'm getting award-winning, very unique genetics coupled with this is from Humboldt County, from the Emerald Triangle, this protected region of excellence. Now you've got something to really hang your hat on and tell a great story to um operate well in the marketplace. How do you think that mission connects to the industry's broad uh broader goal of policy policy reform and better access for consumers? Yeah, I mean that's a great question. I mean like um knowledge is power, right? Like you need people who are in informed, right? I I think what's I think one of the biggest things that's

plagued our industry is like institutional bias, right? from the government, from institutions within talking about America specifically and and what comes with that. In other words, if we're suppressing knowledge of cannabis, so it's not allowed in the universities, we're not allowed to build industry around it. What it does, it suppresses knowledge, right? So, we've been in a bit of a dark ages of cannabis where we're not able to celebrate everything this plant has to offer. In this conversation, we've talked about the medicinal use cases of what it has to offer on the recreational side, genetics, regionality, all these things. That's like knowledge, right? And so the thing is is that, you know, on the one hand, you need consumers to be aware of that, but you also need policy makers. You also need the whole ecosystem needs

to kind of lift that veil of of kind of opacity that has shrouded our industry and bring it into the light where we're able to celebrate all of these incredible things that this plant has to offer across the spectrum I've mentioned from recreational to medicinal and consumers once consumers are empowered with that information then they can make all these more informed decisions. Once policy makers are informed with this knowledge, they can then transcend their own biases and stigmas and institute better regulatory practices. And that's been the big thing, right, with reefer madness. There's been scare tactics and fear tactics that make us think that cannabis is going to make you dumb, it's going to make you sterile, it's going to make you a criminal, it's going to do all these bad things, but that's just simply ignorance. So once we go once we take

the path of knowledge and kind of casting a light on these things, it helps policy makers realize, oh, like this is actually something that's beneficial for the world. Maybe I'm going to have my own grandma consume cannabis for this and look at how it helped her. And then through that process, through education, both on the policy side and on the consumer side, that's where we build a mature market. What have you noticed are the best practices when it comes to transferring knowledge? And I want you to be specific if you can like what have you observed as being like oh this is the best way the people the the person the market the the state understands about this. Yes. Um okay that's an interesting as far as for the state being concerned. Um, you know, it's interesting because we, um, you know, I and my partner have

a lot of friends that are on the policy side of cannabis and that are actively lobbying um, on Capitol Hill or on the state level and they tell us that they often times reference Budist and they reference what we're doing because they see um, because they see that we're taking an education first approach that is again analogous to things that we're familiar with they're like look how Budist conducts these wine style tastings these hospitality experiences for consumers where in other words going to your question like what's very tangible one thing we do at Budist is we host tasting events these tasting events bring cannabis consumers to our events we have a team of our Budists that are like certified sommeliers in cannabis we're using um a lot of marketing tools

to educate the consumer things like, hey, how can you better understand the aroma and the flavor, the effect profiles of cannabis? And we're using various kind of tools in that interaction to educate people about um about cannabis usage. Now, why is that important, right? Because most cannabis events you'll go to is a bunch of people just hanging out, hotboxing a warehouse, partying, just dancing, and all that's great. There's nothing wrong with that. But there's nothing educational about it, right? There's nothing that really touches upon the health and wellness of cannabis. There's nothing that touches upon uh the knowledge and education of cannabis about how cannabis can be integrated into your life, how can it be used throughout the various kind of lifestyle choices you make in your life, how it can help grandma, how it can help you with sleep, how it can do all these

things. So basically, um, friends of ours take as the examples of what we're doing in the market to show that cannabis isn't this stigmatized underground kind of criminal element type of social activity. It actually looks more like people going to wine country to go wine tasting for the weekend. It looks more like an educational seminar on coffee cupping or on learning how to discern different like a flight of whiskeys, right? So, it starts to look more familiar. It starts to look more normal. It starts to look like more facets of our everyday recreational life that are happy and enjoying and and that enrich your life. And it's again trying to separate it

from the stigma that has been kind of unfortunately falsely created around just criminality and underground kind of nefarious activity. Right? So, so our friends that I'm referring to, use this as an example with policy makers to show, see, this is what cannabis when it's fostered, when it's advocated, when it's institutionalized, um, and when education and when it's education forward, this is how we can look in society, not the way that you guys have been painting it through decades of hysteria and reefer madness. outside of um the effect of cannabis and let's say um uh THC percentages, what consumers value today? What have you noticed that they value today when it comes to using Budist as a platform?

Yep. Yep. Well, for starters, you know, you know, I mentioned that we have a team of critics and judges and the way that we assess cannabis effects is one of several criteria or attributes we look at. the how we weight those attributes in importance vary by product type or category. Right? What I mean by that is some products like wine, things like aroma and flavor are really important, right? As we know, as an example, cannabis beverages is one of the fastest growing segments of the market. People want to use that socially, but it's also, you know, you're never going to sit around and enjoy a drink that a drink that doesn't taste good, right? Tastes like crap, right? So, so definitely something that that um you know we all love a well not everybody but most of us love a well-crafted cocktail for example, right? Like there's something about

mixology and craftsmanship and making a good cocktail. So, and that doesn't have has nothing to do with effect. So, cannabis has that as well, right? that especially in certain categories like concentrates for example hash we really look at the aroma we look at the flavor and that's a big part of the experience that we talk about and we emphasize that really tastes good and smells good and the smoothness of it like that and that's before the effect is even coming into play. So there's all that side of it. There's other sides of it like innovation uh hardware technology things like vaporizers right whether that's vaporizers like a Pax, for example, like a handheld vaporizer that you load flower in or it could be like cartridges right or all-in-one

vaporizers. The hardware there has gone a long way and there's a lot of cool form factors delivery methods that have really cool hardware that we also assessed. So, you know, we just got finished judging the California State Fair. I was one of the cartridge judges. I judged dozens of cartridges and all-in-one vaporizers. And the hardware is a key component of that because if I'm not getting a good hit, if it's not a smooth hit, if it's not reliable, if it's burning too hot or too cool or it just doesn't quite work well with the oil, there's a lot of factors we look into in the hardware alone. And this again is all before you even get to the assessment of the experience or the the effect profile. So anyway, there's a lot of other things that we look at a lot other competitions look at packaging like how cool is that packaging? We know that's important in other consumer goods

that you love that you know that Dolce and Gabbana kind of packaging or that Apple packaging, right? For a lot of people, that's an integral part of the experience of buying an Apple product is that box it comes in and the unboxing of the product. So, there's just it's just like any other consumer good. There's all these other things that you can assess and appreciate that aren't just is it getting me high or not or how is it getting me high? Can you tell us where can people find you and where can uh where can they get the um uh Budist uh platform? Yep. Yep. Well, the main hub is budist.com. That's our website. From there, it spokes out. We have an app on the um Google Play and Apple App Store. Uh where you can download the app and that's where a lot of our reviews and you can see our critics as well. So that

you can only read reviews but kind of get to know some of these product experts and and taste makers and and kind of learn from kind of their their craft and how they're looking at cannabis. So that's the Budist app. From there you can also go to um our Instagram which is budist_official. Um those are the main kind of components we encourage people that on budist.com you subscribe to our newsletter. That's another vehicle through which we educate and inform our customers. So between all of those the website the newsletters Instagram and our app those are the best ways to engage with us kind of digitally and through our website or newsletter you'll find out about our events. We're doing events in market every month that are like these tasting events. So, we invite people to come join us um if we're in a market near you.

Yeah. And it's just a very big community. So, everyone's welcome. Come on over and take a look at what we have and what we offer and what you can find out and again educate yourself about. So, that's great. And where can people find you as uh would you like to share your social media? Um, yeah. I mean, I'm not super active my myself on social media, but it is Claudio's Scope is is my social media handle, but I'm not active. You know, my business partner, who is also my life partner, Jocelyn, she's the CEO of the company, and her social media handle is Josie Bossi, and she's very active on social. So in addition to following as well as she has another account Budding Budist um where you can follow her and there's where she tells a little bit more of the journey uh of building butist as a company and everything that I've talked about here today you can follow along on that journey through her personal accounts as

well as budist_official