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A Cannabis Companies Tool Kit
If there is an industry that has more dichotomy wrapped around it, haven’t seen it yet. On one hand you have a generational wealth creation opportunity, massive pent up demand, a plant with thousands of use cases, an industry on the brink of breakout that is ripe for entrepreneurship and investment. Yet, on the other hand you have massive constantly changing regulation, burdensome tax regimes, restricted sales and marketing channels, no institutional capital, no easy banking solutions, a global pandemic, and oh by the way sometimes it’s legal, sometimes it’s not.
The cannabis industry is not for the faint of heart.
So, I salute entrepreneurs everywhere who saddle up to battle this dragon of an industry. In the vein we at Entourage Effect Capital, went out to our portfolio companies, industry contacts and entrepreneurs and said what are you biggest pain points? What tools are you missing? Then we compiled resources to help all of you brave enough to fight the good fight. The resources fall into these groups:
1. Financial Tools
2. Marketing Tools
3. Operations Tools
4. Fundraising Tools
5. Hiring Tools
I hope this serves you, we know it is hard out there but the impact at the end of your journey, well those are worth all the late nights and coffee fueled days. Aren’t they?
For as one grows, we all grow.
FINANCES
1.) CBD Credit Card Processing - Nuvo
What a world. We have hemp and CBD supposedly federally legal AND YET companies who are selling services in this space get kicked off of credit card platforms left and right. While that might sound minimal it can mean profits locked up, missed sales, time spent all because promises from a service provider are not kept. So, we partnered with Nuvo to be a go to support in the industry as they process CC’s for CBD and Hemp knowingly and carefully.
As a guideline (although obviously rates get better the more you process), Square charges CBD sellers 3.90% plus 10 cents per transaction for in-person tap, swipe, and dip payments. Online payments will cost 4.20% plus 30 cents per transaction, Visa/MC/Discover/AMEX, will typically cost a merchant between 3.25% and 3.90% as an all in effective rate for eCommerce which is lower than Square (but they are finicky on CBD).
Nuvo's rates coming in at 3% to 3.6% look sizably more attractive.
NUVO CREDIT CARD PROCESSING CBD/HEMP:
Just for EEC friends offer: Companies get first 5% off their rate and expedited onboarding
Code: EEC - https://form.jotform.com/nuvo/cbd-inquiry
MARKETING
We know you cannabis companies do not have unlimited capital, in fact you have massive capital constraints due to tax burdens and payment terms. And yet, you need marketing, you need pitchdecks to raise capital, and nothing will kill you faster than a bad first impression. So here are two resources in that vein to help you on the cheap
2.) Pitchdecks & Design - Fivrr
I use Fivrr all the time for projects that I'm not skilled at (aka design, pitch decks, graphic, data aggregation) for a couple $ they make me $. It’s the most cost-effective tool I’ve used, just click the link and search pitchdeck for instance. You can get a gorgeous deck done for $100-$200. I’ve used them for pitchdecks, website graphics, business cards etc etc.
3.) Marketing Tool: SEMRush
I use SEMRush to do competitor research on varying websites for our startups, to maximize our SEO (especially important since paid marketing online doesn’t work) and for leveraging organic traffic as well. At $99 a month it’s made us at least 10x.
4.) Public Relations: KCSA/Mattio Communications
In an industry that traces illegality having a PR agent is basically a must. You need to be able to craft your own message and shout it from the rooftops ESPECIALLY as you can’t do online paid advertising in cannabis. We use KCSA but I also adore Rachel Mattio and think her team is killer, so you have two great options. The amount of press we’ve received at their best is pretty astounding.
5.) Affiliate Program Creation: Ambassador
I am OBSESSED with this group. One of my friends Sam Parr from The Hustle (an online newsletter for Silicon Valley insiders) used this program to scale up his newsletter to first 300k super fans but now millions. Last I checked it was 3.6MM+. His copy writing is second to none and this program they used through Ambassador was dare I say, genius. I keep pushing more of our companies to use this tool.
OPERATIONS
6.) Microsoft 365 – Startup Tech Stack
Honestly I debated putting this one on here I know I will get lambasted by sophisticates who have a tech stack higher than the Eiffel Tower including silicon valley darlings like slack, BaseCamp, Dropbox etc etc. BUT, the truth is for startups and growing businesses all those costs add up, you have to know how to integrate them and there is a business learning curve. We use Microsoft 365 and while I fought it tooth and nail (especially outlook) I have come to swallow my words. The teams app is slack, outlook is mail, onenote is evernote, one drive is dropbox, planner is asana, and the list goes on depending on how many of their apps on the platform you want to use.
The BEST part is it’s $5-20 a month per user for all of them. I’m all about pinching pennies early in startups. Click here to check it out.
7.) Email campaigns: Mailchimp
Nothing brings in more investors to us then smart content and email campaigns, if I could shout this from the rooftops I would. I’ve used Mailchimp for years now but personally on my blog and newsletter (you can signup here if you’d like) or for our EEC newsletter here. If you don’t have an email tool I like this one the best by far. Both for its ease of use, beautiful templated campaigns but also for the ability to manipulate our email marketing campaigns.
8.) Your Personal FREE Editor: Hemingway
If you’re tired of asking your mom, dude, chicka, bud, to edit all the content, newsletters, investor updates you do, use Hemingway. It’s free and acts like a smart high school teacher peering over your shoulder.
Related: 7 Resources for Wartime CEOs
Fundraising:
9.) Angel Investing Group: Arcview Group
If you are pre-revenue, early, or need smaller check sizes look at an angel investor network like The Arcview Group. Angels can be patient capital without a timeline for a fund or a target return period. Funds are a lot of work to get on board and usually not the right first money in the door. Arcview can help you with your pitch and getting in front of the right eyeballs.
10.) Cannabis Investing Funds
That said, if you are ready for a fund investment here is a listing of those who put capital to work in cannabis. My suggestion would be check out their investment parameters before you blindly reach out and be aware of how much capital they have to deploy; it will vary wildly. List: Arcview Group, Artemis, Altitude, Arkadian, Beehouse, Big Rock, Canopy Rivers, Merida Capital, Navy Capital, Greenfield, Panther Capital, Poseidon, Stable Road, Salveo Capital, Tuatara… I’m sure I’m missing others such as VC arms of some of the major MSO’s. But a quick google search will show you who puts money to work in this space. The sad but true fact is that none of these funds are giant and the amount of capital to put to work is not giant so
One of the best tools for finding investors today is LinkedIn, that said, too many people use it poorly. My best advice is to NEVER use a bot, and to consider a high degree of stalking before you reach out to investors. Cold outreaches never work. If you want to learn how to super charge this take this super cheap class on LinkedIn Udemy, everyone has more downtime these days - take advantage and uplevel your skill set.
12.) Startup Documents – Y Combinator
If you don’t already have your term sheet and fundraising docs (and you are early stage) you might as well pilfer from one of the best. Y Combinator – they have a list of all the docs they recommend using, essentially giving you the keys to the castle. This gives you something to go out with and then your lead investor can manipulate and may come back with something different.
HIRING
13.) How to hire - Work Rules – Lazlo Block
This is hands down my favorite book on hiring and onboarding new team members. It’s crucial to get this right and no one is better at it (or more notorious at their practices) than google is, Lazlo wrote those rules.
14.) Get Candidates Fast - Job Boards
Hiring in cannabis is incredibly difficult, you have many who don’t want to take the risk on the new industry, you have extensive background check requirements and you have to find them. We created a job board to help our portfolio companies find new employees. Think about doing the same and asking your investors to post them.
15.) Insiders Perspective - VC Advice For Startups
This blog is from Matrix Partners, and his posts are some of the most technical, in-depth pieces on tactics important to startups. They’re not quick reads but they offer valuable insights usually not shared.
WRAP IT UP
That’s a wrap, the list could certainly go on so comment your other favorites for me to add to the list next time and email us www.entourageeffectcapital.com for the areas of pain we missed so we can keep helping to shoulder the load.
Now go cause a ruckus.
Happy Questioning,
Codie Sanchez
Cannacurious? Want to get into the game... here's our contrarians guide or go to my blog for more on cannabis, capital, contrarians and sparking your curiosity.
IG: @codiesanchez
EEC: www.entourageeffectcapital.com
This article is presented for informational purposes only, is an opinion, and is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Entourage Effect Capital, LLC or its affiliates. Any such solicitation of an offer to purchase an interest will be made by a definitive private placement memorandum or other offering document.