Nic Easley is today's featured Cannabis Investor. The HempTown USA Cannabis Investor Series is back for the third year. This year, the Series is featuring eighteen of the cannabis industry's top investors who review the previous 12-months and share their 2021 investment strategies. On today's episode Dan Humiston is joined by Nic Easley from Multiverse Capital. Produced by PodCONX
Nic Easley is today's featured Cannabis Investor.
The HempTown USA Cannabis Investor Series is back for the third year. This year, the Series is featuring eighteen of the cannabis industry's top investors who review the previous 12-months and share their 2021 investment strategies. On today's episode Dan Humiston is joined by Nic Easley from Multiverse Capital.
RC CI3 Multiverse
Nic Easley: [00:00:00]So instead of single stream investments, like I like this company, I like that company, this cool vending machine cannabis company. It's great. But when those are combined, it definitely protects for the downside of one random offshoot, Forrest measure issue causing a company to fail, but for us to even get through due diligence and be a bonafide placement and portfolio position for us, it's already 10 times more likely to be a win because we know the industry, we know the history of those markets. raising cannabis capital. We are continuing this year's cannabis investor [00:01:00] series with another former guest, Nick Easley, the CEO and managing director of multi-verse capital. Nick. Welcome back to the show.
Dan. Thanks so much pleasure to be here and share with the fellow bowls.
Dan Humiston: I didn't realize how long it's been since we spoke, but it's been almost two years since you were last here, which is like a lifetime considering how much things have changed. We have so much to talk about. but before we get into it, for our listeners that aren't familiar with multi-verse capital, I guess if I were to describe your company, I would say there's a lot of firms that applied their investment expertise to cannabis, but multi-verse is one of the only firms that applied the cannabis expertise to investing.
Is that an accurate description?
Nic Easley: absolutely. Yeah. After getting into the industry back in 2006 here in Colorado, I own three C consulting had almost a thousand clients, 30 States nearly 30 countries as well. But working with operators, taking equity positions and, over a [00:02:00] hundred companies with clients. Like we've grit our teeth, like in these operations, like looking at the designs and every single market we've worked in it from the initial licensing.
We know its evolution from being a toddler or those first types of licenses. And now what Illinois looks like today after those first licenses back in 2015, for example. But that major detriment we saw as companies were growing is they didn't have access to good capital or good advisory services.
So we thought, already having helped clients with over a quarter billion dollars of capital raises. Why not have a pool of good qualified LP capital to deploy on projects that we know and see fit like from a due diligence standpoint. So we know cannabis, so you don't have to is what we say.
A lot of the other firms, they've got huge backing or huge experience from exits and other multiples from funds and other sectors, but they're swinging and missing when it comes to guessing and cannabis. Like we don't guess, this has to be a strategic deployment of other people's capital, but it's all based on the cannabis industry experience.
That's all we do have done and ever will [00:03:00] do.
Dan Humiston: , again, I think that's always given you a leg up on. I don't want to say , other investment firms, but it's a different approach that you come to it from understanding cannabis and, a perfect example of that is that the way you have your funds set up which is pretty cool.
Cause you've designated each of your funds to a specific vertical, can you explain to our listeners how that works?
Nic Easley: yeah, like the cannabis industry, people think, Oh, I'm going to invest into cannabis. It's going to be this great opportunity, but you've got IRC to see these weird, archaic tax laws protections for state medical cannabis programs and now federal, but we didn't use to have that. So you really have to look at your investments, what is the company?
Or like, how does this portfolio match with other portfolios to minimize risk profiles, but also to have some synergistic gains between those portfolio companies. So multi-verse capital unlike most, if not all of the other funds, we didn't just do one fund and invest into some real estate, some equipment finance, a dispensary here, some innovative IP [00:04:00] technology of some packaging company.
We have a medical fund. A recreational fund and an ancillary fund. Those were our friends. Three funds also started a hemp fund specifically for legal, domestic and international hemp opportunities. But when we say medical, that's medically licensed operations and that's all of the, his main funds are all us domestic based.
So if it's a licensed medical operator in. Massachusetts. that's a cultivator, a manufacturer, a dispensary delivery company, medical fund is for licensed medical operators that touch the plant. Our recreational fund is for recreationally licensed entities that touch the plant as well.
And our ancillary fund is specifically designated for IP packaging, real estate, anything that services the industry, but that's not directly touching the plant or has IRC two 80 tax implications. And some investors, they don't want the high altitude potential returns along with the high risk of recreational cannabis.
[00:05:00] remember. We're Outlaws. This is federally illegal. So when it comes to doing that, we'll always follow state laws or international laws when it comes to the countries that we operate in. But we didn't want to exclude investors from not being able to invest into our funds or the industry by just lumping everything together.
And it's extremely risky, dangerous, and just stupid. To have lots of investments in one fund that do different things because if something happens to the whole fund and portfolios in jeopardy, and I simply can not allow that to happen to my LPs capital.
Dan Humiston: No. And from an investor standpoint, it gives you that additional peace of mind. that if you're not comfortable with plant touching investments, there's a fund for you. And you know that's going to be outside of that risk. The other thingI've said this about your firm.
w countless times is that you been in the industry for so long and you have a lot of experience and you've developed this amazing global network. And I tell a story where one time I called [00:06:00] you and you're like, Dan, it's really late here. I'm in Prague. of all places, you're doing a deal in Prague.
So having worked on projects all over the world, can you tell us how COVID is impacting cannabis outside of the us.
Nic Easley: Yeah, absolutely. COVID is something we were not prepared for us, a species, even though we should have been, we got away with things for a long time there, but when it comes to international cannabis, it's not The big key difference with international cannabis versus, in Canada, Uruguay or in the United States where there's adult use programs, you can't just get a license, start selling international projects.
You have to go through standardization, quality assurance, protocols, like certifications, even standardizing your genetics. if you had to grow three harvests within less than 10% standard deviation before you could even sell a gram. That ends 12 months to your timeline, but internationally, it's not just for these dispensaries that are open for 24 hours a day in Nevada.
It's for specific import markets where doctors are making [00:07:00] prescriptions for the API, the active pharmaceutical ingredient. So our limitation is based on how many countries are going around. The UN single convention, single treaty on psychotropic substances and allowing them compassionate use of medical cannabis.
And it's not vaporizers transdermal patches, it's bulk flour or bulk oils. The compounding happens in the pharmacies. So you have to look at it as in different metrics, but internationally, here. normally having a passport from America is a grand thing. We can go anywhere right now, maybe three countries.
So we got locked down and the same thing happened with money. These countries, to where the biggest, the things that I'm seeing that happened from this is first and foremost, the UN was scheduled to vote on a rescheduling D scheduling recommendation from the world health organization. And that was supposed to happen in March in Vienna.
that's right. When COVID started, they canceled that and postpone the vote until December. Now, there's all these talks from Russia and China and these other organizations that are trying to not allow the recommendations from the who to [00:08:00] reschedule this. , when that happens, that pretty much opens up.
Nearly all of the world and the members of the single treaty, like nearly 200 countries that can now have doctors prescribing and patients using medical cannabis, huge market share proliferation. But when that vote was delayed or canceled, I know I had plenty of investors lined up for, so that as soon as this happened, they were ready to deploy another 50 million hundred million into the segment.
So that's stopped also. Then you've got major build-outs happening in some of these countries, Portugal, Spain, Colombia, big Peruvian projects happening that then the capital just stopped because investors were terrified. what's happening. We want quick liquidity. That's why they focused on Publix.
Now it just keeps coming up that, there's so much fraud and misinformation there that. public investments are not necessarily the only place to put your capital, even though you can get some quick liquidity international cannabis. Like I said, it's a longterm play, a medium to a long-term hold position.
So I had many organizations that we manage [00:09:00] in five countries. where we can't send staff right now to work and do oversight, or we can't do additional due diligence to check out locations. Or, there might be these Canadian public companies that are managing assets and other places, they can't get their people in our out.
So to really trust what's happening in those markets, if it wasn't for our deep networks and connections, we'd be blind, but luckily like the lights are on for us. We know what's happening in those markets and it's still worth the hold position. But the supply chain disruptions just like the U S side.
All the equipment and things that were coming from Asia that were going to the rest of the world. So much of that stopped where even, I had an operation in Columbia that we couldn't even get like rollable garden carts into the country for almost four and a half months. So you had all these workers carrying like pallets and like bread racks of plants instead of moving them on like standardized equipment.
Dan Humiston: a lot of our listeners are investors that, have a bad taste in their mouth about publicly traded cannabis companies [00:10:00] now, but are thinking about private companies because they hear the prices are of a better value.
Talk about some of the advantages of working with a firm like yours than to try to do it on your own.
Nic Easley: first thing, people hate fees. Me too. Fees suck I'm with you, but having the lowest fee structure, pretty much of any of the cannabis funds. I know we're at 1.5 and 15% and always allow co-investment with no additional fee structure. Like we try to be flexible and know that. But when you're an investor, you don't want to pay fees.
You're looking for this great unicorn investment opportunity, but all companies can fail. And, with our fund, for example, when we're combining investment portfolios into a fund, these dispensaries in California, these dispensaries and delivery companies in Massachusetts, these dispensaries in Illinois, if one of them fails, it's not a problem, but the likelihood of us investing into a failure.
is minimized and reduced and things can always come up. Fraud, nepotism. The market changes the feds come down the state stomps licensing [00:11:00] program, but they're addicted to tax revenue more so than heroin. So I've never seen a state rescind. A whole program, but we combine like assets that all have similar structures.
And many times we're planning parallel M and A's of portfolio companies in the same fund of how these six different groups in Massachusetts, as they grow, we can strategically guide them towards MNAs. Better exit multipliers, or potentially even like nice IPO's from conglomerates that we're creating.
So instead of single stream investments, like I like this company, I like that company, this cool vending machine cannabis company. It's great. But when those are combined, it definitely protects for the downside of one random offshoot, Forrest measure issue causing a company to fail, but for us to even get through due diligence and be a bonafide placement and portfolio position for us, it's already 10 times more likely to be a win because we know the industry, we know the history of those markets.
We know the market, share the operators, what the regulations are doing, where [00:12:00] they came from, and also like where they're going. And investors hate the fee structure, but when you have to worry about managing all these placements or what this press release means in shitty sell that stock might not be the best idea, but cannabis is a long-term venture.
It's the fastest growing industry in the history of the United States, because we're not creating a new thing. This plant's been around demand for around . the illicit market in the United States is closer to 150 billion annualized with a velocity of capital.
It's $6 for every dollar of revenue. It's almost a multi-trillion dollar industry already. That's now just starting to be taxed, regulated. And now. Look at these nice gummies with a standardized experience in grandma's talking about it at Ramazan game and there's more medical research and more acceptance.
And then the hemp industry is growing. it's all happening. And it's really changing from an illicit market to illegal market. So it's not like the risk, like maybe people aren't going to want to wear it. Apple watches or enjoy this new product. The is already there. We're just [00:13:00] creating a way to satiate it legally.
So that risk profile is gone. But the longterm like structuring, when you think about Airbnb or Uber, like the hold period for venture cap positions from the Valley, like Silicon Valley used to be five, seven years. It's closer to nine to 11 now. Like our, that we try to structure everything from a seven to eight year exit plan to where we can help companies grow, sell assets, reinvest, still do distributions and disbursements to LPs when times are good.
But when it's times, like now, like I said earlier, like there's blood in the water. It's this is when we eat. This is when they're. Ration for capital. And this is when we can get more value and more equities for our LPs. And COVID, hasn't slowed us down. It's made us go faster because we realize, the opportunities are now and we can't just keep sitting on our laurels and going through the status quo.
It's we can get that capital into the right companies now to grow this industry for the future.
Dan Humiston: Man. I love it. The blood there's blood in the water right now. That's a great, that's a great, if you're an investor interested in more information, we'll have the [00:14:00] linksin the show notes and@mjbulls.com. So you can reach out to Nick directly for what you get for the one and a half percent.
I think the money is well spent. Nick, thanks for being on the show today.
Nic Easley: pleasure, Dan, any ways that we can help bulls or the bears in this industry, even like the novice investors, it's hard for people to make these decisions and have that trust. our track record, we've been here. We're going to be here. This is all we've done. And like I said, Disabled veteran.
This plant means a lot to me. That's why I got into it. And now, I've seen like the most valuable thing that we can do with this knowledge is help investors make wise placements in it because that's what the industry needs to grow is not just going to be the pump and dump public side. that's fun and exciting and glitz and glamour, but that's not the 10, 20, 3,000 X type returns that we're really looking for here.
So yeah, definitely my pleasure, Dan, anytime you need anything or. People need advising services, or even just, someone to talk to about their portfolios. Confidentially. If they've, think about making a placement don't lose your money. do the right choice here.