Medicine Man Technologies transcends to Schwazze and creates even more growth Through acquisitions and organic growth, Schwazze (formally known as Medicine Man Technologies) has grown to be one of Colorado's largest vertically integrated cannabis organizations. Publicly trading under symbol SHWZ, Schwazze's, CEO Justin Dye, joins Dan Humiston to explain how they are taking the source of their products, cannabis and via innovation and unparalleled thinking, are not just leading the industry, but transcending it. Produced by podCONX
Medicine Man Technologies transcends to Schwazze and creates even more growth
Through acquisitions and organic growth, Schwazze (formally known as Medicine Man Technologies) has grown to be one of Colorado's largest vertically integrated cannabis organizations. Publicly trading under symbol SHWZ, Schwazze's, CEO Justin Dye, joins Dan Humiston to explain how they are taking the source of their products, cannabis and via innovation and unparalleled thinking, are not just leading the industry, but transcending it.
[00:00:00] Dan Humiston: Today, Andres and cannabis capital. We are joined by Justin di, the CEO and chairman of swatches. Justin, welcome to the show.
Justin Dye: Thanks Dan, glad to be here.
Dan Humiston: I'm glad we have you on the show. Swats is a publicly traded company trading under the symbol. S H w Z. And Justin, I have to admit, I said this before we got on at first, I didn't recognize the name and that's because everyone knows you by, your former,name, which was medicine man technology.
When and why did you make the name change?
Justin Dye: As we're putting together our company and growing internally, and thinking about a number of companies we're acquiring emerging with et cetera, we felt like we wanted an innovative name. Schwas is a growth to growth vehicle for the cannabis plant. So it's one of our unique techniques is how we create plant structure and create, fabulous biomass andflower.
So it's [00:01:00] consistent. We tailor it to different genetics, et cetera. So Schwab is to us,promotes growth and, it's something that we rally around and it's an innovative process. It's a part of our three alight methodology and how we grow and cultivate.
Dan Humiston: That's great. That's great. You can incorporate term that we use anyway and fits with what you're doing. I'm reading through your resume and you're another one of those high profile CEOs that made the leap from the real world. To cannabis and, reading through your resume, which is, I have to say it's very impressive.
You have a lot of experience growing companies through mergers and acquisitions. And I saw at the end of last year, you made a pretty substantial acquisition with a Colorado base dispensary chains called Starbucks for people that are not from Colorado. It's pretty well known name in the Denver area, especially do you intend to continue the growth through acquisition strategy in 2021?
Justin Dye: We do. Last year for America and for the world, the pandemic was really difficult for businesses, for families, et cetera. And it was difficult for our company in terms [00:02:00] of raising capital. We have a great story. We have great fundamentals.
We have a great team. We've got a great innovation pipeline and it just, it was challenging. So thinking about 2020, I'm really proud of what the team did. We acquired Really three businesses. So we acquired Mesa organics, which were four retail stores in Southern Colorado. And they're doing terrific.
We acquired purple bees, which we're one of the leading distillate manufacturers, interpret manufacturers in the state and that business is growing wildly and it's led by Jim Parco who's fabulous. And then we acquired six Starbucks stores in December. All in the backdrop of the pandemic.
We also restructured the company to make us a little bit leaner from a profitability standpoint. Sowe're exiting 2020 with wind at our back. We're cashflow positive. Now we're very profitable. So this business that was about a $9 million revenue business we're exiting this year.
We're going to be $65 million and a very [00:03:00] profitable,
Dan Humiston: That's great. That's that is so great.
Justin Dye: And then we've got a really big pipeline We've announced this publicly we're publicly traded company. We have seven more stores and another cultivation under contract with Starbucks that we're planning on closing in the first quarter. And with all of that, will be 115 hundred and $20 million revenue business with great profitability and with free cash flow to really continue to drive innovation and work with our medical customers, and our rec customers to create new products that are exciting, create new experiences at retail.
And we've got a very robust acquisition pipeline. So we're going to have fun in 2021.
Dan Humiston: We're hearing that a lot of the private companies their valuations are flat or they came out in 2020 with either down or flat. Does that environment foster acquisition opportunities.
Justin Dye: I think so, we're positioned to be the premier vertically integrated company here in Colorado. If we're not, we're very close to being the largest today. And then [00:04:00] with the future acquisition, we will be. So in looking at that, being able to be a good partner, pulling our resources, being able to leverage technology, being able to leverage our operating costs, et cetera.
I think that's very attractive to sellers that have maybe one dispensary or have a manufacturing business, et cetera. So we're pretty selective in how we want to build out. The company to make sure we're being innovative and in working with customers. But we think the the acquisition pipeline is very robust for us and there's some really good, talented companies out there with great people with great founders that we're excited to try to work with.
Dan Humiston: Yeah, I think that's one of the. Positive sides of the pandemic is that some pricing is coming down to it, make it so that it makes sense for T for companies to merge or join together. And, I looked through your list of companies and it's the first thing that struck me is how diversified you really are.
From cultivation to dispensary's to extraction, to [00:05:00] manufacturing, to consultants, you even have a nutrient company Moving forward. You talked about maintaining diversity, but is there one vertical that you are going to be more focused on than the other or one sector that you're gonna be more focused on than the other.
Justin Dye: No I would say, we think about it in terms of we have a wholesale business where we work with manufacturers and provide them, turpines provide oil. For them, we were very high quality. We use state-of-the-art lean manufacturing techniques in our purple bees campus. In poo Abloh.
So it's going to continue. So on the wholesale side, we love that business and we're going to continue to add services and had add value to our customers that are manufacturers and manufacturer vapes. They manufacturer gummies, they manufacture edibles, et cetera. So we're going to continue with that.
And on the retail side we're really excited about Starbucks. I think Starbucks. Really one of the unique operators in the country. And we're lucky to have, 13 of them here in the state. So we're really excited about the Starbucks brand. We're excited [00:06:00] about going to work on some new innovation in terms of the dispensary experience, whether it be pull up and.
Pick up curbside, omni-channel with, windows of delivery, et cetera. And we're really excited about our brands too. We've got some new brands that we will make available at retail and all focused on solving customer's needs.
Dan Humiston: Yeah. Yeah. It looks like you have the foundation for really rapid expansion. They're all based in Colorado though. Right now. Are there any plans to expand outside of this state or are you going to focus on just dominating the state first?
Justin Dye: Yeah we're focused on the Colorado customer.You look at, Lakewood is different than Aurora different thing. Grand junction is different than Pueblo or Trinidad. So we think there's so much opportunity for growth in the state of Colorado.
It's the second largest cannabis state in the country. Have a great regulatory framework here. We understand it. The med does a great job here, so you know what the rules are. [00:07:00] And we really see continued opportunity to continue to have retail, dispensary, operations, and offer great products that help people from a health and wellness standpoint.
Dan Humiston: Last year, or maybe over the last two years, a lot of cannabis investors got beat up in the stock market do you think now is a good time for people to get back into the stock market?
Justin Dye: I think you have to look at individual securities and individual companies and from a valuation perspective, certainly with the Canadian correction. So most of the Canadian LP firms up there suffered greatly from a stock price standpoint. And, some of it was mismatched demand and supply in their market
and I think also, people had jumped into this and didn't want to be left out of the cannabis boom, sothose create bubble markets. So you gotta be careful. What I think is important is the industry's really pivoted the last 12 months to fundamentals.
So what is your revenue? What is your gross profit? What is your cost structure? What is your [00:08:00] free cash flow? What is your EBITDA? And you're starting to see businesses trade on EBITDA, not just on revenue promise, certainly need growth. Certainly you need innovation. So I really think it's a great time to get in.
If you look at how folks are trading and so forth, I think, there is a lot of upside. In this industry could be a hundred billion dollar business in the next decade. And I think the dilemma of people being concerned . About the cannabis plant and some of the concerns about it.
I think they're waning.
The plan is the magical plan. It does a lot of good. And I think the mainstream shoppers starting to understand that whether it be, health and wellness or whether it be, having fun and relaxing and sleep, there's a lot of good here.
And, and I think we're going to see an absolute boom. In the growth of this market, and it's really exciting the plant does a lot of good for human beings dramatic stress, sleep pain and it's absolutely a great substitute for some of the issues involved with.
With [00:09:00] narcotics and with the opioid crisis. So those are things that all pulled in Maine. And, we all have personal experiences with family members who may have had cancer, where cannabis was effective and , easing their life and giving them more appetite support, et cetera.
Dan Humiston: Well,
. It's so exciting to see people of your pedigree moving into the industry. It just validates everything that we've known for a while now. I'm really happy that you're here and I'm sure a lot of other people are too.
I'm going to have all of your information in the show notes, including links To your website. So if you're interested in finding more about investing, they have a great section on the website investor relations section. It will tell you everything you need to know about investing.
And also if you're, , a cannabis company in Colorado that maybe wants to talk about a possible merger acquisition. I'm sure the team over Swazi would be happy to talk to you. Justin. It's been great talking to you today. We're going to have to do this again.
Justin Dye: Dan, thank you so much. I really appreciate it. And [00:10:00] thankful for all of our team members at Schwab's and appreciate all of our customers and shareholders. Thanks a lot.