Today's featured Cannabis Investor is Narbé Alexandrian 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 Narbé Alexandrian the CEO of RIV Capital CSE: RIV | OTC: CNPOF 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 Narbé Alexandrian - https://podconx.com/guests/narbe-alexandrian RIV Capital - https://www.rivcapital.com/home
Today's featured Cannabis Investor is Narbé Alexandrian
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 Narbé Alexandrian the CEO of RIV Capital CSE: RIV | OTC: CNPOF
TWO12 - https://www.two12.co/
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Narbé Alexandrian - https://podconx.com/guests/narbe-alexandrian
RIV Capital - https://www.rivcapital.com/home
RC RIV Capital
Dan Humiston: [00:00:00] Today on the MTA bulls podcast, we are continuing this year's cannabis investor series with another former guest Narby Alexandrian from R I V capital. Narby walk them back to the show.
Narbe Alexandrian: Thanks for having me really excited about.
Dan Humiston: Well, I got to tell you, I'm excited to speak with you too, because So much has happened in your company over this last year. Since we last spoke, let's briefly go through some of the big news starting. With the name change. Is it Riv or is it riff capital used to be known as canopy rivers. Why did you change the name?
Narbe Alexandrian: So it's either riff river Riv. I call it roof capital, just cause it's easier. And it comes off the tongue a bit easier. So the, the reason we changed it is we did this monumental deal at the end of 2020. So December, 2020, we announced it. We closed it end of February, where we divested three of our steaks in our portfolio companies that were intertwined with canopy growth that got us about $380 million of capital.
We took a portion [00:01:00] of that and bought out canopy growth. And this isn't all a 12 to 18 months orchestrated plan in order for us to be able to attack the U S market without any restrictions. So we're really excited about that. And ever since that time, we communicated a pivot away from venture capital and towards becoming a plant touching, operating company through an emanate.
Dan Humiston: Oh, okay. I didn't see that. That's really interesting. Let's talk a little bit about that in a second. Just, before I forget you also did a deal with Scott's Grove subsidiary. Can you tell us about that deal?
Narbe Alexandrian: Yeah. So, so we announced last month that we did a 150 million us strategic investment, we received it from the Hartford collective. So it's a subsidiary Scott's. So through the transaction of we're bringing up. Our domain expertise or investment knowledge, and then that marries with Scott miracle grows expertise in operations, R and D sales and distribution.
So it was a relationship that we've had for 12 to 18 months prior to us announcing. And as soon as , the handcuffs came off the whole [00:02:00] canopy growth transaction, where we're allowed to go to the U S market, but we hadn't yet. And we had a bunch of cash, but we hadn't utilized it yet. We hadn't touched a plant yet.
That was like the perfect time for us , to work on something together where they could invest in us in a very legal way, because they have some of the similar restrictions that a company like canopy growth constellation. And that allowed us to, to then go into that the U S market. And now we're looking at targets where we're getting close to a few of them, but we've been building our pipeline in terms of finding what are those companies that want to bring together to create a synthetic.
Dan Humiston: Your balance sheet must just be flushed right now with cash. Is that mostly through acquisition? Are you going to do some organic growth what's the.
Narbe Alexandrian: A bit of both. I mean, we have this very strong partner behind us that can help us bring the cost of capital down to something that's incredibly competitive with some of the major players in the U S. So right now we have over 400 million Canadian of cash available. So about 325 million us.
[00:03:00] So taking into account some of the restrictions related to the funds that we received from. We have a balance sheet that can basically accelerate what our strategy is to build a multi-state cannabis offering platform. Some of that will go towards acquisition by cash. Some of that cash would go towards operating expenses of whatever we do acquire, and then some of that cash will just be saved up for some of those.
Dan Humiston: Wow. I suspect the us federal legalization. Just stuck in the mud is nothing's happening and it's probably holding the valuations down and creating some attractive acquisition opportunities. Is that the intent or you're going to take advantage of that opportunity.
Narbe Alexandrian: Yeah. , I've said this for three years now that federal legalization, the U S is not going to happen all of a sudden as much as everyone was banking on, Schumer's go and what's happened with Booker and all the different things. These things do take time, especially somebody that's been marked by stigma for 95 years, been prohibited [00:04:00] for 95 plus.
It, it would be crazy to think that governmental power would just open the gates all at once and say, now we're legalizing it. These things do take time. So outside of all the catalysts that many of the media players do talk about th the biggest catalyst to me, that's going to push this thing over is state by state legalization.
So every state that comes in and legalizes for medical first and recreational adult use. That gets us one step closer to the teetering effect, where if you have more than 50% of the states legalized for adult use large majority for medical use, there's going to come a time where the states will go to the federal government and say, well, look at us we've legalized it.
Everyone else has legalized it. You guys get to get off your butts and legalize this thing from a federal perspective, because that doesn't make sense to keep it the way.
Dan Humiston: No, it doesn't, but as you pointed out, the wheels of, of lawmaking move very slowly. And there's opportunity, I guess, for [00:05:00] acquisitions, because the value is just as downright now. talk about some of the, the direction that you're going to take. Are you going to be focusing more on limited license states or are you going to be, are going to look at open license states or just doesn't matter?
Narbe Alexandrian: Yeah. So limited licensed states is the nature of what we're looking at. We do like the supply and demand dynamics of it. Where you have a huge amount of demand, because all of a sudden legalizations happen. You have a small supply because there's limited licensed regimes. And the reason is limited licenses because you have a state government that's saying, okay, I want to legalize it in the future.
I want to provide more licenses, potentially. But at this point, I just need to understand what the supply chain looks like. So we'll take some time, keep it tight, understand who the players are, understanding what the customers are, how this influences teenagers and the listed market and neighborhoods and schools and all that different stuff.
And then we'll slowly start expanding it and take that power away from government and give it to the private sector. We've seen that happen in numerous. Sectors in the past that I have looked to legalization alcohol being a [00:06:00] great example of how that's happened over decades instead of a number of years.
So we, we do truly believe that these limited license states offer a fantastic value right now that said, dad , we're not the type of group especially with the backing from Scott's milk. We're grown where our focus is. Hey, we're going to cash out on legalization and move on.
We're trying to create like a 20, 25, 30 year business plan here. So when we're looking at these businesses and the states that we're looking at one of the stress tests that we always do is okay, like I get that cannabis is $400 a pound in Michigan, and that's like double what you're seeing in California.
But what happens if it comes down to 200 bucks, what would happen is that's narrow Ken, these Michigan companies. And then you go down that path of stress testing and shocking them to say, take a very mature, unlimited license market. Like California apply the same metrics and the standard of living differences from California to Michigan or [00:07:00] Pennsylvania or Illinois or whatever state that is that state, that cultivation, that process, the SOP is behind it.
Can they survive that type of a stress? That's the type of game that we're playing all the time when we're looking at targets, because you don't want to be in a scenario where you pick up a target for tens of millions or hundreds of millions of dollars. And then you, a few years from then margin compression takes shape.
Like it has in many, many, many states and provinces and countries. And then you're left with something that you can't really use.
Dan Humiston: I see, let me see, let's talk about the acquisition targets. You mentioned that if somebody has a license what type of arrangements are you making? Are these people staying on? , are you going to cash them out or it will be on a case by case basis.
Narbe Alexandrian: Yeah, two six, take a step back. Our plan is to acquire, invest, launch, and develop us operators. Across some of the tractors states to create a multi-state platform. So we already have some near-term prospects and we're engaged with a number of them. And we're looking at new targets all the time.
That would help us launch that us [00:08:00] strategy. Once we do do that platform or investment than we do look to continue building out the platform with focus on acquisitions of brands and operators, bringing brands from California, look at brands in the east. And, and really developing something unique, a strategic nature that you probably don't see in the market that much.
The investment we got from Scott's miracle grow, what will help us provide us with additional resources and the flexibility we need to get there when we're looking at companies right now be like, dad, I'm not an operator. And I don't, I don't grow the plant. I know how to run a business.
I know how to deal with the capital markets and the public stock, but we're looking for. Founder centric companies that have a deep, intimate knowledge of their customer base. And in some ways, Dan, we're not looking for cannabis companies, we're looking for consumer obsessed companies that are in the cannabis sector.
, we like to talk to companies that are very deeply entrenched in the culture and , the plant in it and how it grows, how customers like. Incredible customer service, the point that they might impact [00:09:00] EBITDA to materially because they want to give the customer that best experience ever.
And that's the type of things that we look for when we're looking at companies. And to your question because we're not operators ourselves, of course, we would want to keep that the team that we do acquire.
Dan Humiston: Yeah, it makes sense. It makes sense. If they're successful, . You might as well scale what they're doing as any opportunity for ancillary businesses. Or are you just focusing on the plant touching verticals.
Narbe Alexandrian: Yeah. The ancillary market is very attractive. And in the sense, Scottsville Quiroz subsidiary Hawthorne group, they have a billion to 1.3 billion of run rate revenue, and they've worked six years and then celery industry providing goods and services to cannabis growers all across the country and Canada as well.
So they have deepen significant knowledge and expertise of the us cannabis. The ancillary side is attractive. We've invested a lot through our former venture capital platform. That said focus is key for us. And right now the focus is finding that plant touching cannabis [00:10:00] operator. And then we can look into then so risk space, if need be
Dan Humiston: Okay, well, you're publicly traded. So if any of our listeners are interested in learning more about the financials of the business, it's all available to you. And or if you're interested in investing with. All of their stock information and links in the show notes. So just go to the show notes, click the links.
I'm sure somebody from team will be happy to talk to you if you're interested in maybe working on an acquisition or we're talking about investments now, I wish we had more time, but we can't go a year without talking again, because just too much happens in your company. Thanks for doing this today,
Narbe Alexandrian: thanks for having me really enjoy this.