Today's featured Cannabis Investor is Cody Shirk The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Cody Shirk founder of Explorer Equity Group Produced by PodConX TWO12 - https://www.two12.co/ Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Cody Shirk - https://podconx.com/guests/cody-shirk Explorer Equity Group- https://www.explorerequity.com/
Today's featured Cannabis Investor is Cody Shirk
The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Cody Shirk founder of Explorer Equity Group
TWO12 - https://www.two12.co/
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Cody Shirk - https://podconx.com/guests/cody-shirk
Explorer Equity Group- https://www.explorerequity.com/
RC Explorer
Dan Humiston: [00:00:00] Today on MJ bulls, we are continuing this years, two 12 cannabis investors series with another former guests and a great friend of the show. Cody shirk from Explorer equity group, Cody. Welcome back to the show.
Cody Shirk: Dan is great to be back.
Dan Humiston: I am always glad to have you on the show. But when I invited you this year, you mentioned that you were more way beyond cannabis and you were investing and you wondered if you were a good fit. So I thought the logical question why did you move away? And where did you move to.
Cody Shirk: To be clear, I'm, I'm still a big believer in the cannabis market and there's still a ton of opportunity. There's opportunity in any industry. If you look hard enough, but cannabis the industry in general has matured where there's serious players coming into the game that the big companies that were small just five years ago are.
They have huge corporate interests in them. They have big P investors and they're not the early stage venture capital style investments that they used to be. And that's kinda my game where I look for industries where there's early opportunity, where there's not a lot of [00:01:00] players.
There's not a lot of investors looking at it. And I think that's where in any industry there's opportunity anywhere that's not crowded and you can come in. And make sense of what's going on early on that's where there's opportunity. So for me, cannabis is still something I'm very invested in, but I'm not actively searching for new deals or as active as I was several years ago.
So what have I been focusing on now? Well, psychedelics is obviously a natural. Transition for a lot of that really cannabis investors. I actually started investing in psychedelics about three years ago. And , I'm pretty much, I would say, like fully deployed in psychedelics in the sense that I'm not investing anymore.
I, I feel comfortable with investments that made. That said psychedelics is still really early and there's a ton of opportunity there for anybody who wants to dive in there. I actually think it's going to be bigger than cannabis, longterm, but it's much more of a biotech, pharmaceutical play. So yeah, I've invested there and then done a couple of things in space and.
No tech companies where I think there's some real legs and in the immediate future. So we can dive into any of those if you'd [00:02:00] like. But yeah, that's kinda my game where I look for industries are super early or not crowded yet. And I try and get in there make sense of what's going on make relationships with a lot of the CEOs and early movers and figure out who's the real players.
, and then back who I think is going to be able to build big, great thing.
Dan Humiston: know, You're not alone in this search to be a first mover or. Goal to be a first mover investor. I think a lot of the listeners who are listening to this show went to cannabis because there was an opportunity because they were first, when we were five years ago, like you said, the today's billion dollar companies were just getting started.
So they got an opportunity to jump in early and that's, most people would refer to that as really high risk.
Cody Shirk: Yeah. it's high risk. I just want to make that clear. Like I always people, what are you investing now? Or like , what's the hot stock tip? And I always say, well, first of all, early stage investing is very risky. But if you're going to do it, you have to go all in. I don't mean necessarily dumping your entire bank account.
I mean, all in with your time and effort and doing due diligence in any early stage industry, if you just [00:03:00] spend maybe six months to a year, just getting heads down, really doing research. Pretty quickly, you can figure out who's the real players and who's just coming in as a snake oil salesman and for an early industry, if you can figure out those early players that are serious are legitimate and have a track record of success, you can make some investments early on that are likely to be successful just because in the early industry, the early.
Legitimate players are typically successful. That said you're going to have some losers in there as well, but, and then early stage investments, a couple of successful investments that are going to far outweigh those losses that you're going to have.
Dan Humiston: The thing that used to do before, COVID that I think gave you a huge advantage was that you traveled to really remote places. hemming. The name of your company is explore equity group because you were explored the world I know you weren't able to do that during COVID, but post COVID, have you been able to do that?
And if you've discovered any of these emerging trends.
Cody Shirk: It's actually like a bigger topic that I think it's really hit home. I'm very [00:04:00] patriotic and pro-America, but I've made investments in over a dozen different countries. And before COVID I know, I spent a long time in China and kind of got the full exposure of what's really going on China from the boots on the ground , and a couple of other countries.
But , obviously the world's shut down in terms of being able to travel everywhere. And I had to refocus my efforts back in the U S exclusively. But one thing that has kind of been a humbling experience is just realizing that. The U S really is the best place to be investing.
There's rule of law here, there's structure, there's morals and ethics that are generally accepted by the business community. , and of course, there's going to be things that go wrong, but there's at least a structure here that allows for a consistent playing field for investors and entrepreneurs alike.
And that's one of the big lessons that. By doing those investments around the world, it's just, the U S really is an incredible place. , so right now I'm, I'm pretty much exclusively investing in the U S and to be honest, I don't see a time within the next five, 10 years, if not further, that I'll really be venturing out into the world to do any more of those [00:05:00] investments, just because yes, there's opportunity everywhere.
But from a risk adjusted perspective, it's probably best to stick in a jurisdiction. That's going to have your back when when the poop hits the fan.
Dan Humiston: Oh, that's a good point. That's a good point. Well, , you do see some trends though, that happening outside of our borders, that sometimes dictate a direction that you may want to take, but
Cody Shirk: Absolutely. And that's one good thing to stay aware of what's happening globally, especially with cannabis. That's where the, one of the big opportunities I see now is that, the us is usually a leader in almost everything. And frankly has been a leader with legislation changes as well. Of course, we've had a lot of turmoil, but when.
A population that has access to medical or recreational cannabis. The U S has massive. I mean, just to say the California is bigger than the entire country of Canada. And now we're looking at in New York Florida, Illinois, Colorado, Oregon, Washington, that may go on and on and on they're there.
They're going through. For rec markets and you go, whoa, this is a major industry now. So you look at that and then you say, oh, let's look at Europe. What's going on over here? What are the trends over, over [00:06:00] there? And you can kind of see them following suit. So for people who want to target early stage investments and Europe, you can target some countries now that are going to develop some great programs.
Definitely not going to be as big as the U S but there's opportunity to get in early. And a lot of those countries are going to follow the models that us states have of made mistakes with or. Or had success with, but they can kind of cherry pick what worked out best and then try and replicate those models in those countries.
Dan Humiston: Yeah, that's good advice , like you said, it's. They can look to what we've done to, to avoid making the same mistakes, . let's switch gears and talk about the entrepreneurs, the startups. I know one of the things that we talked about in previous interviews is that you always sort of look for the good ideas in the company.
And sometimes those good ideas are not well. The startup or the entrepreneur thinks they are most investors just don't have time though, to dissect somebody's business and say, you know what? This is really your business, not this, this is really your business. So [00:07:00] what kind of advice would you give a startup to, to maybe identify an opportunity within their business that they may not see because they're too close to, they don't see the forest from the trees.
Cody Shirk: Yeah, I I think there's a saying that's like a, what's it think global act local move with the sense of how this bigger perspective, but attack the problem from the, where you're at immediately and not try not to get lost in the bigger picture. But some advice I would say it's coming from me and this is not advice.
As in, I know what's going on is this advice, and I've lost a lot of money doing some boneheaded mistakes and backing some companies. I wish I hadn't. , but I think that saying is, I think global act local is really relevant in the cannabis. And the reason why it's relevant is because I think especially several years ago, it was a lot of companies that raised a ton of money to develop these.
Basically huge footprints, whether it was to manufacture cannabis or to sell it or transport or whatever it was. And what happened was they got hung up and just lawsuit after lawsuit with, with different cities, counties, states trying to figure [00:08:00] out how to make their business work. And , when you expand too rapidly, what happens is you end up spending more time on.
Fighting with people rather than actually building your actual business. I think right now, a lot of the cannabis companies that are still successful or the kind of the homegrown brands and companies that have focused on their local communities or local region and made a really solid customer base by providing great products and services.
And now that they can prove that they're a profitable, successful company, now they can go expand to new states. Now they can expand to new services. But as an investor, it's hard to get excited about a small company and, in a little town doing something. But that's one of the lessons I've learned is just, Hey, , keep it simple, stupid saying , is really relevant with cannabis because at the end of the day, this is a plant that grows out of the ground.
And you put it in a package and someone consumes it is no different than potato chips from concept. If you look at it that way, it's like, okay, as an investor, let's back [00:09:00] companies that can do that, meaning get a product to, into someone's hands in a way that is profitable. Like let's not over complicate this with the insane supply chain issues and all.
It comes with a big company. So, I don't want to go too far more into that, but I think it's the key. Keep it simple. Stupid concept is really relevant still for investors, looking at companies in the cannabis space.
Dan Humiston: I say this all the time. There's too many companies that are chasing the investor by trying to create. Concept that they're a unicorn. And to do that, if you're running your business to try to attract investors, I think you miss the whole point and that's, if you build a business that's profitable, they will come.
If you build a business, that's not profitable, but Hey, it would be if you guys invest this money, I think that's bad.
Cody Shirk: Absolutely. And I don't want to throw any companies under the bus here, but anybody who's listening, who has been in the cannabis game for a little while, , they know what happened in Canada. So a Canada's entire population is smaller [00:10:00] than the state of California, but there's companies that spend hundreds of millions of dollars over the past five years developing.
Across Canada whether it was actually building ground up greenhouses or getting traditional greenhouses that were growing tomatoes or other vegetables in and converting them to cannabis grows. And what happened is you had this huge. Supply of cannabis with not that many consumers.
So you just spent all this money growing this plant, and then no, one's actually consuming it. And there's two things going on there. One there's the actual like literally population. Okay, well, you can't grow more than people are going to consume, but also just the logistics of transporting it and getting it from province to province in Canada.
That was a big issue. And then also. Good a country. You can't export from Canada to the U S if the us federal government still says it's illegal, but a lot of companies invested a lot of money with that expectation that that was going to happen. Well, it hasn't happened yet. And it's been it's, everyone's kind of tapping their fingers on the table.
And I think it's. Idea to have, but from an investor's perspective, like it's a pretty high risk assumption to make the [00:11:00] governments are just gonna roll over and change change the laws in a couple of years. So, yeah, I think that's, that's one of the big things that looking back and realize like, well, there was some big mistakes made here with just the assumption that all of a sudden things are magically going to change.
And I raised my hand as being one of the people that was, stuck in that trout for a little while.
Dan Humiston: Well, it's easy to get caught in that wave before we wrap up , can you tell us some of the other advantages of working with you guys?
Cody Shirk: , I don't want to throw a full pitch out there, but , at the end of the day, I'm an investor that. literally goes out and meets up with companies and meets with entrepreneurs and gets a really good idea , of who these people are and what they're all about.
And I'm not going to say that I'm any better than anybody else and making friends or, or establishing these relations. But I will say that , I've made enough mistakes in the past five to 10 years that I can go back and read entire novel, the things not to do.
And while I'm not necessarily proud of that, per se, I am confident in knowing that, Hey, I can speak with authority with a lot of the past mistakes that I'm not going to be making in the future. And I encourage any [00:12:00] investor who is entering any industry, but especially the cannabis industry to only invest with people that know what the heck is going on.
And really don't only way you're going to know anything in life is by going out and making mistakes and then learning the hard way. It's the school of hard knocks. , I mean, We did very well, but looking back, I can just look at some things.
I'm just like, oh my God, I can't believe we did that. I will never make any of those mistakes. You can just because it hurts so bad when it happened.
Dan Humiston: That's great. Yeah. , you're not alone. I, I think you're right. The only way to really, whether it's business or investing or anything else is you actually have to do it. And then you learn from your mistakes and you move on and we'll have links to explore equity group in the show notes. So if If you're a company looking for. Investment or you are an investor that wants to be part of this first movers group. Check out the link in the show notes or go to pod connects.com. Cody, always fun to have you on the show. Let's do it again next year.
Cody Shirk: Excellent, Dan, I really appreciate your time. And I always love talking to [00:13:00] you.