Today's featured Cannabis Investor is Jeff Howard 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 Jeff Howard co-founder of Salveo Capital 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 Jeff Howard - https://podconx.com/guests/jeff-howard Salveo Capital - https://www.salveocapital.com/
Today's featured Cannabis Investor is Jeff Howard
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 Jeff Howard co-founder of Salveo Capital
TWO12 - https://www.two12.co/
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Jeff Howard - https://podconx.com/guests/jeff-howard
Salveo Capital - https://www.salveocapital.com/
RC CI4 Salveo
enhanced_dan-humiston_89_09-09-2021_110519_#18:[00:00:00] today on the MJ bulls podcast, we are continuing this year's cannabis investors series with a former guest, Jeff Howard, the managing partner at Salveo capital. Jeff. Welcome back to this.
Jeffrey Howard: Great to be back and always good to chat with you.
enhanced_dan-humiston_89_09-09-2021_110519_#18: Well, you know what? The last time we spoke, I, looked at it. It was almost a year ago today, and there's so, much it was changed. I thought maybe that'd be a good place for us to jump off from an investor perspective. What are some of the big differences today versus 12 months ago? Say.
Jeffrey Howard: Well, I, so a couple of things. So the industry, obviously from a year ago, been totally different largely as a result of COVID and so forth, but , what really ended up happening with the industry and COVID, which I don't think necessarily maybe most people outside of the industry realize this is that from a revenue [00:01:00] generating perspective and from a market development market growth perspective, , the cannabis market in the cannabis industry flourished and grew tremendously during the.
COVID, as bad as it was first mankind and everything associated with it. The one silver lining was the cannabis industry. People. Use the product more, they had more time on their hands. They were home. There was more stress, there was more anxiety. And there were new users that were brought into the marketplace as a result of COVID and being home in stress and other related things.
And so , for the industry, it was fantastic. And so the industry grew tremendously from a year ago , and then, as a result of that there was a pretty significant bull market in the public equity cannabis stocks as a result of that
enhanced_dan-humiston_89_09-09-2021_110519_#18: Well, I think being deemed an essential service, that didn't hurt and it also, yeah. I see your portfolio companies are in the news a lot lately. Maybe you can give us a quick update on how they're [00:02:00] doing.
Jeffrey Howard: Yeah, so doing great. Again, we've had a good run here. I think for those of us who have been doing this for a while, and, I've made , some significant investments, now quite a few years ago, call it 2016 ish. They're starting to pay off these companies have started to mature.
And have for the most part gain scale. And and now there's been a flurry of two things that have gone on in the space. Which should continue. There's still a lot of MNA activity happening in the space.
And so evaluations can it be a good w with the right combination. And then for the, the later stage companies and mostly plant touching companies, but again, seeing more and more non plant touching, ancillary cannabis tech companies going public as well. And so I think , that's obviously healthy and that's a great sign for the industry.
Something that obviously wasn't available to the industry back in 2016, 17 until 2018. And so we've had a couple of companies that have gone public. We have a couple of companies in the queue to go public. We had a cannabis tech [00:03:00] company that was part of a leaf logics.
That was part of a roll-up acquisition. And so it's been good for them.
enhanced_dan-humiston_89_09-09-2021_110519_#18: Wow. That's a really encouraging, like you said, a lot of these investments that you made five, six years ago are now starting to pay off. And I see a ton of activity. It seems like all the cannabis energy is moving east of the Mississippi and you're based in Chicago. So you're sort of sitting in the catbird seat.
Do you find that as an advantage?
Jeffrey Howard: for sure. I absolutely do. I mean, you can make the case that Chicago is the cannabis capital of the world. , or you can make the case that it's, the Silicon valley of cannabis. , you have, three of the top five.
Largest MSO is here with Verano, Cresco, and GTI. You have a host of ancillary companies here in the cannabis ecosystem, two of which were investors in . And so . Like I said, three of the five largest companies in the space here located, but there's this whole ecosystem that's been built around the space, those companies in particular driving [00:04:00] jobs in revenue and in certainly tax revenue but also jobs and social equity opportunities.
And then this ecosystem is, has expanded outside of these companies and outside of the plant touching, these ancillary companies. So I feel in Chicago, I think Chicago has become the center of , cannabis capital. It used to be Toronto. It's now Chicago. And then you go east of Chicago, obviously massive opportunities was New York and New Jersey.
Legal, , but not set up yet. , but then you go down. So these do have, you have your Virginia, which is going to be a phenomenal state. You already have a lot of MSOE making some significant investments in Virginia and then obviously, Florida has always been a monster market.
Those are obviously the well-known , name ones you could throw in Michigan and Ohio to . Michigan's a great state for both medical and rec. And then, Ohio has been always a good medical. And again, I guess I could keep going.
Cause Pennsylvania too, you can't forget about Pennsylvania. So,
enhanced_dan-humiston_89_09-09-2021_110519_#18: No, but it used to be, if you weren't on the west coast, you weren't really in it. And now it's, [00:05:00] that's not the case anymore. You, like you said, you're like right in the center of the activity and then you, I'm assuming that, those big companies that are in Chicago or based in Chicago are spawning a lot of new companies that are filling voids, and also looking for investments.
So you're right there where you need to be.
Jeffrey Howard: No. I was just going to say, as an example of that, we're an investor in a cannabis tech company called Cielo. They're based here in Chicago and they provide tech services to, most of the ESOS and some of which, where , we are investors as well.
So it's like, , there's this ecosystem that's built that was kind of self fulfilling which is great for investors.
enhanced_dan-humiston_89_09-09-2021_110519_#18: Yeah. And that brings up. Another point that I think is really important for our listeners to understand about Seville capital is that you are really more of an entrepreneurial type of house where , it's not just investing the capital , it's sharing your experience with the companies that you invest in, and maybe you can give us a couple of examples of how that cooperation or their collaboration has helped those companies.
Jeffrey Howard: [00:06:00] Yeah. So we definitely , are actively involved in helping our companies. , we think, as an investor, you should be a value add investor. If you can and only it's only beneficial. So, we try to be value, add to the companies that we invest in and.
It runs the gamut as far as how we help, like last year, obviously once COVID started when no one knew, we were in deep discussions on, contingency plans for the business and so forth. Plan a plan B plan C worst case, best case, middle case, and so forth.
And so, it runs the gamut from stuff like that were involved into, obviously financial management , and then most recently, which is again, very exciting and shows the health of the industry. For some of our later stage investments companies and later stage.
We're helping them , from a much more industry strategic perspective for an exit, whether it's an M and a, or whether it's a route to the public markets. And so that's exciting as well. And so again, I think that this goes to show the strength of the industry.[00:07:00]
enhanced_dan-humiston_89_09-09-2021_110519_#18: I think that right there is worth it because, entrepreneurs, aren't in the business of raising money, they're in the business of running their business. And if you can help them do the next round of funding or find an exit, think that's, worth its weight in gold.
That's awesome.
Jeffrey Howard: Yeah. I mean, entrepreneurs obviously are awesome. It's just amazing. Some of the people that we meet along the way on this, cannabis investing journey, just how passionate, smart, dedicated, and how driven, but entrepreneurs who run companies, they get all wrapped up and they're passionate and at times get a bit myopic in their vision.
And they don't necessarily see the whole picture as we do as investors. We sit on the side of the table. , the entire industry, the entire ecosystem. We see what valuations things trade at. We see what valuations we're deals are getting done in their particular silos. And then also, more broadly.
So if we can bring, value add in the particular silo, strategic [00:08:00] analysis of where we are as a company from a valuation perspective versus where the comps are and where we think that. That's what we're doing now.
enhanced_dan-humiston_89_09-09-2021_110519_#18: Yeah, I think that makes a big difference. We don't have much time left, but in the time remaining, maybe you can talk to investors who are considering investing in cannabis. What are some of the advantages of working with surveil capital?
Jeffrey Howard: I think any, cannabis is still early days. Even though it doesn't feel like that for some, it still is early days. And for a retail investor or any investor. It's still a fairly complicated market. The public markets are available, but in the U S it's only OTC.
And so, because of all of those things, I think it's important in an industry like this, if you're going to make a significant investment to really kind of hand it over to somebody. No, it does this for a living and has been doing this for a living, has the experience, has the deal flow knows the nuances in the market between private public evaluations of such.
And I just think you're going to get more bang for your buck, with somebody who's an [00:09:00] expert in this particular vertical, which we at Salveo clearly are . And so, my advice to anybody out there is, take a good look at Salveo take a good look at others. But it is a market still that requires a significant amount of due diligence on a full-time basis.
enhanced_dan-humiston_89_09-09-2021_110519_#18: so anyone that's tried to do this in a part-time basis, usually realizes , pretty quickly that they need some professional guidance. We'll have all of those links in the show notes. So if you are a company looking to raise capital or you're an investor that wants to get into the cannabis industry, I'm sure somebody from Jeff's team would be happy to talk to you.
And. Jeff Nat slat. Wait another year before we talk again. Thanks for being on the show today.
Jeffrey Howard: Dan again, it's always great hearing from you and talking with you and for sure love to do it again. And I'd love to do again sooner.