MJBulls: Cannabis investing and cannabis fundraising

Cannabis and Corona | Investing during the Covid-19 crisis

Episode Summary

"Buy when there is blood in the streets, even if the blood is your own" CoronaVirus is creating cannabis investment opportunities. Pete Karabas from Key Investment Partners joins Dan Humiston to talk about his recent blog Covid-19 and Cannabis. They discuss some reasons why strong cannabis companies are thriving during the crisis & will need capital to gain inexpensive market share. Produced By PodCONX

Episode Notes

"Buy when there is blood in the streets, even if the blood is your own"

CoronaVirus is creating cannabis investment opportunities.  Pete Karabas from Key Investment Partners joins Dan Humiston to talk about his recent blog Covid-19 and Cannabis.  They discuss some reasons why strong cannabis companies are thriving during the crisis & will need capital to gain inexpensive market share.   

Produced By PodCONX

Episode Transcription

Dan Humiston: [00:00:00] Today is special optimistic Cannabis and Corona report is brought to you by Helix Biotech, the largest seed to sale tracking and dispensary point of sale software solution in the industry since 2010. Cannabis dispensaries, cultivation facilities and manufacturers have trusted biotech to securely and confidently keep them in compliance while managing their businesses with flexible solutions for both THC and Hemp Industries, customizable workflows built in machine learning and data analytics that deliver actual insights to the right people at the right time. It's clear why cannabis companies in 37 states and nine countries depend on biotech for comprehensive Cannabis software and business solutions that cover the requirements of compliance seed to sale tracking and data reporting in every state. There's really only one choice. Biotech go a biotech dot com today for secure Cannabis software solutions that you can count on.

 

Pete Karabas: [00:01:07] I really do think that we're going to see an increase in the rate at which states legalize the trillion dollar stimulus package, spending copious amounts of money in the form of financial relief for businesses and for individuals. That money has to come from somewhere.These budgets are going to have big holes and that need to be filled. Cannabis tax revenue can really move the dial. 

 

Dan Humiston: [00:01:33] From MJ Bulls Media.It's the Raising Cannabis Capital show. I'm Dan Humiston. And today's show is a special optimistic Cannabis and Corona report about Cannabis opportunities during the Global Corvid-19 crisis.

 

Dan Humiston: [00:01:59] Today on Cannabis in Corona, Sur thriving the crisis we are talking about Cannabis investing with Pete Karabas from Key Investment Partners.

 

Dan Humiston: [00:02:09] Pete, welcome to the show.

 

Pete Karabas: [00:02:11] Hey, Dan.. Thanks for having me. Glad to be here.

 

Dan Humiston: [00:02:13] Well, it's great to have you back on the show for a Raising Cannabis Capital listeners. You remember Pete was a guest back in the fall and he's here today to talk about his recent blog, Corvid-19 and Cannabis. Pete, let's sort of 50000 feet. How do you think the virus could affect the private Cannabis capital markets?

 

Pete Karabas: [00:02:32] Yeah. Dan, it's a great question and something we think about a lot. Needless to say, you know, in terms of how it's corvid is going to affect the Cannabis market. A few different things. We think companies that have raised cash say in the last six months or so, I think they're going to be in a good situation. They're gonna have enough cash to weather a storm like this. On the other hand, I think companies that maybe have plans to raise cash in a future round of funding, those companies could run into some issues. And I think what that's going to translate to at the end of the day is going to be a favorable market for investors who have dry powder. I think these investors are going to have an ability to dictate terms and conditions that they wouldn't have otherwise had, the ability to if we were still in this 10 to 12 year bull market. I think one thing that is very important to highlight here with Cannabis, I mean, we've seen the recent spike in sales as people are stocking their pantries. I do think that Cannabis is relatively recession resilient. Everyone, of course, saw Cannabis dispensaries and other Cannabis related businesses in this as essential businesses here as we all are saying.

 

Dan Humiston: [00:03:39] And that was a great boost in confidence, I think, for the entire industry. I mean, think about it. Five years ago, we we've never thought about having Cannabis as an essential in a crisis. It's it's such a good thing. It's not the first time industries have gone through downturns. And I'll be the scope with this economic downturn is gigantic. But we can look to history for guidance due to some of the key lessons that Cannabis companies can learn from companies that have thrived previous crisises.

 

Pete Karabas: [00:04:10] Yeah, you know, I think that's a great question. There's a great study that I posted in the blogs. What the study does is it really walks you through basically a survey of over 5000 businesses and how these businesses fared in recessionary environments. And you really want to focus on your core business and how to grow that business and how to refuel it. So looking at cost cutting and non-essential areas of the business as a way to prepare yourself for the next stage of the business cycle. And so from a sales and marketing standpoint, who are your customers that you're serving that you can focus on? What are your high probability conversions in terms of new sales and work with those people? They might be constrained in their budgets. You've got to work with them and continue to close deals.

 

Dan Humiston: [00:04:56] You know, I can agree with you more about the plan to where you want to be when this is over, because that gives you sort of that beacon something to look forward to, to build your plan to get there. And you can follow that plan, because I think one of the biggest mistakes that happens within businesses, emotions get involved in these situations and you make emotional decisions that are most of the time short term or reactive, instead of thinking long term more proactively and like you said, thinking about how you want to be when you get out of this. What do you want to look like when you get out of the crisis and that helps you stick to a plan. There's a saying that fortunes are made when there's blood in the streets. You think this is a good time to make Cannabis investments?

 

Pete Karabas: [00:05:41] Absolutely. I understand that especially over the next one or two months, we have to focus on the public health side of things. I understand people's public portfolios certainly have taken a hit. But when you think about Cannabis, Cannabis consumer is alive and well. Cannabis sales are growing regardless of what public stocks do. Cannabis is the fastest growing crop and fastest growing industry in America. Cannabis is also a vise and it's also a medicine. Both pharma and alcohol are recession resilient. So Cannabis kind of as a dual factor of recession resilience. And when you're thinking about investment Cannabis before the whole corporate pandemic was very capital constrained. I think right now you're going to see in terms of capital coming into the industry, I think a lot of people may put a pause on that. So Cannabis may even be a bit more capital constrained. So I think as an investor, that's really going to enable you to drive favorable terms and conditions. I really do think that we're going to see an increase in the rate at which states legalize the 2 trillion dollar stimulus package, say spending copious amounts of money in the form of financial relief for businesses and for individuals. That money has to come. Somewhere these budgets are going to have big holes and that need to be filled. Cannabis tax revenue can really move the dial.

 

Dan Humiston: [00:07:04] That's you know, that's a really good point that you just made. Backing up one other point before that is that the market isn't getting smaller. The Cannabis users and the opportunity for legal use of Cannabis is only increasing in your point to this, adding to the revenue of the states that are really gonna be struggling. I mean, think about all the sales tax revenue that just dried up when essentially the states just turned off the economic motor directly. But Cannabis is still producing revenue at the same rate it was before. You mean you talked about this a minute ago that sales actually surged? You know, initially. So the states are getting a little bit of a bump from the Cannabis industry. Let's take a short break to let you listen to a quick preview of our next episode.

 

Abner Kurtin: [00:07:55] Our primary business is focusing on the transition to an adult U.S. market. You know, the adult U.S. market is driven by less sophisticated customers, quicker transactions, hive's and way higher transaction volumes. So we define our business as try to get a thousand people in and out of a dispensary a day at our busy dispensaries.

 

Dan Humiston: [00:08:19] Tune in on Thursday to hear Abner Kirtan from a sound wellness holdings. And now let's get back to today's show.

 

Dan Humiston: [00:08:29] I'm sure you're looking at various sectors that you like more than others can maybe share a couple of those with us.

 

Pete Karabas: [00:08:35] Yes, sure. On our end, we continue to focus the majority of our time in the ancillary sector. There's certain businesses within Cannabis in terms of what you were maybe a little more favorable today in the midst of a recessionary environment than others. Some of the obvious ones are delivery. Their business is just booming. I think the bio synthetic space and the ag tech space is a very interesting place to look a little more resilient to a pandemic and not only to a recession. In addition, that period in the agriculture space, you're protected as some essential business. So I think you want to look more broadly. Would think Cannabis is what sectors today are really being affected directly by the pandemic as opposed to those that are immediately going to run into issues with supply chains and other issues that are going to derail a business from its original plan.

 

Dan Humiston: [00:09:27] I like the delivery services. I. You're right. I betcha that's one that's getting a lot of increase business from Nevada. They stopped dispensaries and they moved it all the delivery services. I think it was Nevada. And that's really another good opportunity. Like you said, they could be growing faster than they can digest the growth and they need just cash because they have to hire more people and they have to. There's a lot upfront costs. Oh, yeah. That's a good one. I follow Petes and Key Investment Partners information on the MJBulls website and in the show notes. I'm also going to have links to his blog, Corvid-19 and Cannabis in the show notes. So Pete, thanks for being on the show today and thanks for being upbeat about this. There's always an opportunity and sometimes it just takes a little bit to get past all the doom and gloom to start to see it.

 

Pete Karabas: [00:10:18] Absolutely, Dan. And thanks for having me on the show. And yes, you know, we've got to be optimistic. A staff mistake. And we're definitely confident we can get through this all.

 

Dan Humiston: [00:10:26] That's the right advice at this point. Keep optimistic. Thanks again.

 

Dan Humiston: [00:10:33] Today's show was made possible by the generous support of our sponsors, like all 36, the country's premiere blockchain payment processing platform that's providing dispensaries and its customers with a safe and secure payment option other than cash. To learn more, go to Alt36 dot com. Today's podcast was produced by MJ Bulls Media, the industry's premier Cannabis podcast network with original music produced in part by Jamie Humiston. I'm Dan Humiston and you've been listening to the Raising Cannabis Capital podcast.

 

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