"From Investor to Operator: Navigating the Cannabis Industry's Unique Challenges" Paul Weiss, CEO of Paper Planes joins Dan Humiston to discuss his unique position as both a cannabis investor and operator, emphasizing the importance of having control of a brand in the ever-changing cannabis industry. He also highlights Paper Planes' focus on quality, consistency, and competitive pricing in their products, and their ongoing search for the right institutional capital partner to support their growth. Paul expresses gratitude for the podcast's contribution to the industry and looks forward to future conversations. Produced by PodConx
"From Investor to Operator: Navigating the Cannabis Industry's Unique Challenges"
Paul Weiss, CEO of Paper Planes joins Dan Humiston to discuss his unique position as both a cannabis investor and operator, emphasizing the importance of having control of a brand in the ever-changing cannabis industry. He also highlights Paper Planes' focus on quality, consistency, and competitive pricing in their products, and their ongoing search for the right institutional capital partner to support their growth. Paul expresses gratitude for the podcast's contribution to the industry and looks forward to future conversations.
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Paul Weiss - https://www.linkedin.com/in/paul-weiss-6013a41a9/
Paper Planes - https://vangst.com/companies/paper-planes-extracts
Recorded on Squadcast - https://squadcast.fm/
[00:00:00] Today on the MJ Bulls Raising Cannabis Capital Podcast, we're joined by Paul Weiss, the c e o of paper planes. Paul, welcome to the show. Thanks, Dan. Great to be here. Thank you. Well, I appreciate you doing this and being here today.
For the years that we've been doing this podcast, we've either interviewed cannabis companies that are raising capital, or investors who are investing in the cannabis space, and I think you are. The first guest that we've ever had that checks both of those boxes. Not only were you a cannabis investor, but you have now are a cannabis company, and I thought it would be great to talk to you and start, get started and talk about what inspired you to jump into the fire.
Well, I can remember back in the, the late 19. Nineties and the early 1990s actually when the internet boom came about. And there was a lot of people that were smart enough to get real educated on it. [00:01:00] Not all of them made money right away. Some of it was a grind, but they took ride. And there's a lot of emerging large industries that start relatively small and become very large.
I, I'd had my eye on cannabis for a long time, and. I had been an investor in different areas of it, but mostly through real estate type investments and relatively conservative as most people do, and they try to securitize them and all the rest. What I realized very quickly about five years ago was that the only way to truly make a, a successful company is to have control of a brand.
Is to have something that has a direct relationship with the consumer that has relevance. I know there's a lot to be said about the picks and the shovels and IP and all the rest, but that to me is, in an industry like this that pivots so often I. Either replaceable or becomes obsolete.
But if you have that relationship and you could manage that relationship and it's an intimate relationship with the consumer you can build on it and create and scale and scale quickly. It's very important to have all the right components and elements of that. [00:02:00] And I think that our companies pulled that together.
And when I saw the possibility of creating that with the partner that I joined with Carter Latimer and the team that we put together it was worth jumping into the fire and becoming an operator and taking on that. Incredibly large responsibility. Yeah, you could say that again. Well, you are already one of the top selling concentration brands in California, which is the largest market in the, in the, in the country.
So you could be arguably one of the largest concentration brands in the country, if not the world. Where do you see your growth opportunities? Well, let's be clear. We're definitely not one of the largest concentrate brands in the country or the world. But we're working on it real hard. We're up and coming.
We are self-sufficient. We, we are profitable, and a lot of other things that make us unique. Where do I see the growth coming? Was that the question? Yeah. Yeah. I think that there's a, a, a [00:03:00] very large misunderstanding in the industry that macro trends and taking big picture approaches are critical.
And I, I hear that quite a bit. My experience, and it's been hard fought, learned experience. This industry is a knife fight. And it's fought every single day and it pivots and it's, and it changes. You're, you're fighting issues of matching off your expenses with your revenues, but more importantly, you're trying to anticipate what customers are gonna want three months and six months away.
So you take huge growth betts. If you want to become scaled real big, real fast, you have to be slower and steadier. You've gotta be very responsible how you manage your risk. And that's a big part of, of, of our formula. Where's our growth gonna come from? By systematically increasing inventories and emphasis on products that sell and decreasing those that don't.
And we are gonna grow just like, [00:04:00] a small little pebble as opposed to a big boulder. There's lots of room for us, and we can feast on Froms, so the smaller companies have all the scale in front of them without all the baggage. And that's where we're at right now, which is a great place to be, quite frankly.
Well, you're building the perfect mousetrap. That's, that's, that's the key. And then once you get it in place, then there's opportunity for wherever direction you wanna go, whether it's in your state or other states. Talk to us about the advantages that you feel that that paper plans has , in your sector.
What are some of your strengths? Well, clearly we, we have a partnership between the two people that run the company, which is myself as c e o, and I like to consider myself the offensive line of the company. And then, and Carter Latimer, who's the founder of the brand over a dozen years ago, and understands all things cannabis and absolutely critical to have both of those components.
Not just working with each other, but trusting each other and having. An ability to appreciate each other's [00:05:00] importance. There's a asymmetrical relationship in those areas in most of the companies that I've observed, and they ebb and they flow with political issues, financial stresses, and all the rest.
We've managed to be very clear. We're all in it for growth, success, make a big company and make it beautiful. And that concept has been a guiding principle for us, and I'm just very fortunate that we've built a really great team, that we're all very professional. While I'm the only, I'm the only Chad, I guess, that parachuted in the people that I work with are from the industry.
We can call them legacy, but I could tell you that. They come at this with a deep understanding of risk. I mean, black market teaches you that when you're young. And then they grow out of that. They become really successful risk managers in their own way. They know how to make great hash, sell great hash, make great products, be in touch with the market.
And now that we are more vertically integrated with our farms as well as our manufacturing facility they know how to manage the [00:06:00] enormous amount of optionality that you must deal with. To channel your inputs correctly, to make as much money as possible. So, going forward, it's really just systematically analyzing the market quarter by quarter, making decisions no more than three months out, trying to pair off your capitalization and try to keep things smooth as possible.
Makes sense. It makes sense. Now talk about your products. Let's talk about your products. Great. Yeah. Give us, just give us some, what are the selling points, what are the things that, that, that customers keep coming back for? We are probably the best manufacturer of quality, B h o hash in California.
We make dabble concentrates both in jars as well as shatter with the number one shatter provider in the state. We also are emerging as one of the larger vape cart players. Those are our primary markets. We just made an acquisition several months ago and bought two farms up in [00:07:00] Grass Valley.
Which we're extremely proud of. And we're going to be not only channeling that product and that output into our own products, but we're gonna be introducing flower sales as well. We, we have a very large distribution network. We sell to all the major chains. And all. I guess right now we're probably in about 500 different dispensaries.
Oh wow. Got them all. Yeah, so, so we are comfortable with that in terms of understanding where we enter the market and why we've grown. We have an absolute core philosophy. We want to make the best products, have it be repeatable and come in just below the market on pricing, period. Full stop. And it doesn't get more complicated when the large chains.
The Sies and the others of this market, which are very powerful chains, they're very price sensitive and they're very quality sensitive. Of, and they want it to be consistent. These things must be there and we don't lose sight of that. I admire a lot of other companies, seven 10 shout [00:08:00] out to them out in Colorado.
They do great things and they can achieve premium pricing, but they've taken many years to build that. There's other brands I could list them that we really admire. But we understand what we do well, which is we make the Terps greatest products we can. We're always current with our strains, and we try to price them.
So not only do our clients, our dispensary partners want to buy them, but then they could price them correctly and not have to excessively price them to make a larger markup, which really builds a greater relationship with our end customers. Well obviously 'cause you have 500 of them, so there are 500 partners out there.
That's you're doing something right. You're doing something right. Well, let's, because this show is the Raising Cannabis Capital Podcast, I always ask all of our guests if there will, will be, or. It actually is an opportunity for them to participate in your growth and be and invest , in your company.
Now, I know you've, since joining the company, you've raised a ton of capital. You have a lot of experience both , on both sides of it. [00:09:00] How about now? Is there something in the future that investors can, can maybe , sink their teeth into? Gosh, Dan, I feel like I'm perpetually raising capital. I mean, anybody who says otherwise is posturing for you.
I could tell you that. Yeah. This is a very illiquid environment and one of the key ways to grow a company properly is to manage an illiquid environment and manage it as well as possible and try to keep the machine oiled. One of the things that I've been very careful not to do with our capitalization, and I will answer your question, but I, let me bring the plane up to altitude first.
One of the things that we're very careful to do is to make sure we don't overcapitalize. Because you're diluting investors, you are taking on the risk of deploying that capital intelligently, and there's always a hole in your pocket when you have a lot of money in the bank and you don't want to. I.
See that money get deployed incorrectly. Now I'm speaking from a small company perspective. So if we have an extra million dollars, that our, our cultivation group and our [00:10:00] production group are all gonna be banging the table on their needs and we'll end up deploying it. So we try to run real thin.
We try to run as close to the line as possible. I know that's not the best way to sleep at night, but it's definitely the best way to run a company. Yeah. In terms of our capital plans going forward. Yeah, we're definitely getting fatigued with all that I just said, it's a hard way to live your life.
Sure. So what we're trying to do is find a real capital partner an institutional partner that we could work with, and it's very, very difficult. Not difficult in so far as, getting phone calls returned and having conversations. Fortunately that's happening. But to find the right partner that we wanna work with, That's not looking to skin us alive when they make the investment or not looking to be overly involved.
'cause we're a pretty sophisticated group. We know what we're doing. That would be ideal. And I think that's probably out there in the next three months or six months. We'd like to do something on a more substantial basis. Until then, it's really been friends, families, doctors, goldfish, anything that'll, have, have a wire instruction that they can follow.
And we've managed [00:11:00] that. We have a cap table of almost a hundred people and. Half of them wrote checks, half of them through acquisitions. We've made several acquisitions that have been strategic, but we've done it the hard way. We've maintained control. We haven't had to do, we don't have any option overhang.
We don't have a lot of things that are really make a deal hairy when somebody's trying to buy into it in a larger basis. We would do that, but. You're gonna kill us down the road when these options are up. So we've kept our cap tables very clean. We've done our offerings pretty much without a lot of preferences, not much that you really have to talk about.
I mean, maybe some have a distribution preference, maybe one, have a slight exit preference, but nothing over the top. And we can have a solid conversation with the large funders, and we just have to find the right fit in the interim. We don't do crowdfunding, so I don't think a podcast is the best place to talk about.
Send me your your, your money. Yeah. But yeah, we're definitely gonna be always raising money 'cause we do it in small increments that that's our [00:12:00] style. Yeah. Well, you know what's great is that you're profitable so that, worst case scenario, you just have, , you may be slow down your expansion plan or slow down that next, that next line that you wanted to add to make sure that, you don't put yourself too far over your skis.
But that's just a great thing that , when you're a company that's profitable and a cashflow positive, it, it gives you that, that security, even though you're having sleepless nights sometimes. I was gonna say, Dan, it doesn't feel like security to me. I hear you. Well, I'll, I'll, I can tell our listeners enjoy this con, enjoy this conversation as much as I do because we get the chance to talk about some stuff that you normally don't get a chance to talk on in this show.
And I talked to Paul about this before we got on. I'm gonna have him on , in maybe within the next month again, so we can expand more and talk a little bit more about the environment and some tips on maybe raising capital and some, just some nuances. Based on , what he's experiencing.
And he's [00:13:00] agreed to come back on. So I'm gonna take advantage of that and please stay tuned for that. , but for now, Paul, unfortunately, I have to wrap it up. I will have all of his information in the show notes, and , I'm confident that if you fit the demographic of of a partner, that may be long-term strategic.
Financial partner. I'm sure Paul or somebody from his team would be happy to talk to you or if you wanna learn more about the product definitely, definitely reach, reach out to Paul. Paul, again, thanks for being on the show and let's, we're gonna do this again in a real short time, and we're gonna re resume this conversation.
But thank you so much for today, Dan. It was a pleasure. This show is a great service to the industry. Thanks so much for what you're doing. We really appreciate it,