David Metzler 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 David Metzler from CBD Capital Group. Produced by PodCONX
David Metzler 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 David Metzler from CBD Capital Group.
RC CI3 CBD Capital
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David Metzler: And that is a proxy for long-term success. So essentially thinking about us is we have a formula to be able to pick the winners in this space of those 3,800 brands. That's why family offices and investors are coming to us is because, there's so many brands out there where do they put their money?
If they're going into just one, they're not hedge. And a lot of these companies, just have the same me-too product. Whereas our brands are known to work with that moat and that defensibility. And that means their exit value will go way up , when we sell out portfolio. today in raising cannabis capital, we are continuing this [00:01:00] year's cannabis investor series with another former guest David Metzler, the co-founder and CEO of the CBD capital group. David, welcome back to the show.
Good to be here again. Thanks for having me.
Dan Humiston: Well, a lot's changed since we spoke in may.
David Metzler: that happens during pandemics, a lot changes during those times. And luckily we're still here and everyone's safe and sounds like the same thing on your listeners and your side too.
Dan Humiston: Yeah, I think the whole world is moving forward, but it's certainly a different place than it was before. Today's show. I want to take a deeper dive into investing in CBD. Which means I'm going to skim over a lot of this stuff that we previously talked about. So if you want to learn more about David, go back and listen to episode two 18.
David, since our last talk and people asked me about your company, the way I've described. The CBD capital group is a cross between a cannabis investor and a cannabis company, and like an investor you provide capital and like a cannabis company. You have a business plan [00:02:00] that goes way beyond just investing
for our listeners, that miss last episode, can you briefly explainyour business strategy?
David Metzler: Yeah, our business strategy is assembled the best and only proven companies in the CBD space and bring them together to help give them a liquidity co-op so that they win. And then our investors one at the same time and the key operating word in that sentence is proven and ability to actually quantifiably know that they're the best.
Dan Humiston: Yeah. I know neither one of us are doctors, but. there's just been so much information suggesting to CBD or another Canadian make you healthier. And therefore, they may,help with COVID. we don't know this. Do you think that general perception has increased the demand for CBD?
David Metzler: Everyone right now is concerned about immunity, health, reducing inflammation, and. In the middle of that, you also have what I would call in America, an outbreak of anxiety that we've never seen before [00:03:00] that we'll have PTSD on a cultural level for America for multiple years to come. And so that anxiety is one of the top three reasons that people take CBD.
They take it for anxiety. They take it for insomnia and they take it for chronic pain and inflammation. And we know this through two medical outcomes studies that we've done. that's what makes us unique is we actually know which brands work against those conditions. So from my background, working with United healthcare and other big health insurance companies like Aetna.
We took a medical outcome study, apply it to these CBD companies before we invest in by them. And they have to actually demonstrate that they can measurably increase the quality of life of their customers, their patients, before we buy them. That's what makes us fundamentally different is all of our brands have passed the medical outcome study that shows that their clients, their customers, or patients actually feel an improvement statistically, over, a placebo effect.
Dan Humiston: Oh, that's interesting. I don't remember if we spoke about that last time. I know last time when we spoke that , you said another [00:04:00] criteria that you put into place was that the companies that you invested in needed to have at least reached sales threshold of. I think it was a half a million dollars.
are you seeing more companies meeting that sales threshold now?
David Metzler: I think more companies are profitable because the prices on the actual, CBD commodity itself has come down. But no, the ability to, cross the threshold, the chasm and get to. Scale is harder and harder for companies. That's why my management team comes along. There's really three things that differentiate us.
I talked to you about the outcomes and being proven products, but my management team, Oh, I'm honored to work with these guys. So my COO, he built Bulletproof coffee up to a nine figure brand. My COO worked for Microsoft before that Accenture and private equity, my legal team has done. over $500 million of transactions.
And we have branding guys on our team the next year, they helped scale some of the biggest brands. You name it up from Google across. So our team comes [00:05:00] alongside these brands and helps them cross the chasm, and really scale at a faster rate than they could ever do on their own. And that's what we're here to do is help them succeed
Dan Humiston: I think a lot of investors that are out there that are interested did in taking it vintage of cannabis and the opportunities of cannabis. Find that information so comforting to know that there's a team here. that's helping your CVD portfolio companies get to the next level.
. There's a general idea belief that , especially now that cannabis was deemed essential that we're moving in that direction of federal legalization, but there are still so many family offices and institutional investorsthat are uncomfortable or can't invest in THC
companies.
David Metzler: That's why we stayed on this federally legal CBD side of it. Exactly. you're always ahead of it. right now we're on the federally legal, CBD only side because family offices can play in that and institutional investors can play there.
[00:06:00]Dan Humiston: walk our listeners through the big picture. okay, now we've made an, a bunch of investments. We have a stable of really solid CBD companies that we've helped get to the next level.
Now, what.
David Metzler: Yeah. So we want to take these companies, and put them together and give them all an exit that they couldn't get. And then what we're really building is a moat around our brands that are proven to work. So if you think about Warren buffet, he only invests in companies where there's a defensibility to it.
Similarly, what we're creating is defensibility is there's 3,800 brands out there that we're tracking. 3,800 CBD brands out there. There's so many of them it's so easy to start. What is hard to do is actually quantify that your brands work and thereby people will keep buying those products, month over month at that price point.
So what we've come up with is uniquely a system that allows us to go in there and those 3,000, 800 brands and tell you as an investor. , if these companies will succeed [00:07:00] or not. And that's the only one that we know of that actually has this medical outcome study that can use to see efficacy of these brands.
And that is a proxy for long-term success. So essentially thinking about us is we have a formula to be able to pick the winners in this space of those 3,800 brands. That's why family offices and investors are coming to us is because, there's so many brands out there where do they put their money?
If they're going into just one, they're not hedge. And a lot of these companies, just have the same me-too product. Whereas our brands are known to work with that moat and that defensibility. And that means their exit value will go way up , when we sell out portfolio.
Dan Humiston: Man, that's really helpful to, for investors, to have somebody that, with your expertise on that side of it, because let's face it. Trying to one-off an investment into an, a CBD company. with 3,800 companies? How do you know which ones are the good ones and which are the bad ones?
David Metzler: Don't do it like, honestly, don't invest in any startup company right now is my take because there's too many already out there. There's going to be, a fallout coming. Only [00:08:00] the companies that are working. Especially in a recession timeframe, people are not going to pay up bucks a month for a product that doesn't help them relieve pain, anxiety, and insomnia in a measurable way.
So we have a formula that lets us know if that is the case and we can protect our investors because of that. That's why we've been successful in raising our rounds . And we're going into a series, a round where all these people are saying, Hey, look, we don't want to go into one company. We want to go into you invested to that.
And help us out there. And then the only other add that I would say to that is a lot of these companies, like we've been lied to, we've been cheated. We've been all these things out there and we protected our investors money. So that's the heads is we are all a lot of military guys formerly. And so we stand between our investors and these crazy kids and people in this space and make sure that our investors don't get defunded out of that.
And that is something that is a responsibility that we take very seriously.
Dan Humiston: well, especially in this environment it just fosters bad actors because margins are tight. Like you [00:09:00] said, 3,800 companies. If you're struggling, , they may cut some corners and, you just don't want to be on the wrong side of that. Talking about your portfolio companies, , how have they done with the pandemic.
David Metzler: I'll talk about one of them right now, that we're really proud of. It's this Hawaiian brand. And we looked at a bunch of different products and this one was the best tasting the company's called mana Botanics, and it's all ingredients out of Hawaii. So it's very unique.
So if you think about anxiety right now is a massive issue. We all think that Hawaii is a relief to that. So think about that and think why we invested, what we were able to do is bring in a family office that owns a bunch of grocery chains. They are going to put it into all their whole foods equivalent.
And in the course of a year, we're going to double the revenue of that company. And that's what we do as a management team is investors of that magnitude. Think about us as, Hey, we can trust these guys to deliver for us. And that's what we're doing for one of our companies. E-commerce just as a whole has gone up.
But, as a lot of these brick and mortar companies [00:10:00] Foz like that, companies in four seasons and others have been closed. So we've been able to manage, to overcome the fact that a lot of the wholesale counts went down because of COVID and overcome that with e-commerce and then bring in additional distribution for that company.
And we're really proud of the outcomes. We have a great relationship with the team and we've done what we said we're going to do. And that's always good to look investors in the eye and say, we did it. We came in and we protected and we not only protected, but we accelerated and scale.
Dan Humiston: I'd say it's good for investors, but I'd really say it's good for the Hawaiian company. What was the name of that company again?
David Metzler: Nutanix. It's just a great company, all local products that are sourced, with vanilla to all the way to local tumeric. it's just awesome. It's a great product. we're really proud of that investment and what we're doing there.
Dan Humiston: I'd say those guys are probably pretty happy with the partnership. so, if there's any other CBD companies out there looking for some growth funding. Or investors that want to talk about investing in CBD? we have all CBD capital group's [00:11:00] links in the show notes and@mgbulls.com.
So I know David would be happy to continue this conversation offline. David, always good to catch up. Thanks for being on the show.
David Metzler: Yeah, pleasure to be here and yeah, we're happy to talk. We're, we're very selective about who we let in from an investor and, or a company perspective, but we're always open to partnering with the right people that can actually add value.