Tommy Truong: [00:00:00] What is the framework? So if I was a founder of a brand and you're coming in you can easily get to 15 million without necessarily the right infrastructure in play.
Leah Heise: You could get to a hundred million without the right infrastructure. It's amazing. It's amazing.
Tommy Truong: Thank you so much for joining me today.
Leah Heise: welcome. I'm happy to be here.
Tommy Truong: I am really looking forward to our conversation. I've geeked out about you for the last hour and I feel like I know you really well.
Leah Heise: that's very nice. Thank you.
Tommy Truong: So I, we, you have a very unique background actually, and it's well documented on online, but I really want to focus on scaling businesses 'cause I. I, that's the most interesting thing for me. I can spend my entire day, geeking out on this. So you started a dispensary, Maryland it to Forefront, joined them and helped them scale and
Leah Heise: Yep.
Tommy Truong: How big was forefront when [00:01:00] you joined
Leah Heise: Forefront was very small. Initially when Forefront started, its practice in cannabis. They were basically a license writer. They would do help form teams and then apply for licenses. Right about the time that they did my license in Maryland, they decided they were gonna start acquiring assets and become more of an asset holding company.
So that's what they did, and that's what we did. I helped them build out the infrastructure for human resources. A bit of retail and the retail brand and compliance.
Tommy Truong: So what was the initial challenges because. Probably at that time, cannabis businesses were growing very fast. It's, and when you accelerate growth without infrastructure, it can be very painful. So I'm guessing they had nothing. You join and how fast did the company grow?
Leah Heise: The company grew very rapidly. It was two years and two months [00:02:00] to a public exit. So there was a, an RTO we reversed did a first takeover to a company in Washington State to go public. It was a company that was already traded on the Canadian Stock Exchange. So we RTO OED into them.
We were acquiring assets and attempting to integrate assets at the same time, building out basic infrastructure across all departments, including, finance and compliance and human resources and operations, and trying to figure out how to operate that as a portfolio company. So it was very fun, but it's also incredibly challenging.
And as with most of these multi-state operators that have been built in the industries over the years. The goal was to get to revenue as fast as possible, and we were bringing in a lot of capital. And I, we don't necessarily build the best things when we're running towards exits and running towards, revenue. We don't take a lot of time to set back and think, but we did it. We cobbled it together and it went public and [00:03:00] it's existing right now.
Tommy Truong: So what did you learn? Because there's a lot of, there's a lot of wisdom there going through that. I know that there are certain thresholds where. You pass a certain employee mark in a business, you have to reorganize the infrastructure and then you hit another milestone.
You have to reorganize the infrastructure. Communication gets broken down in between departments. I can't imagine doing five of those over two years.
Leah Heise: Yeah, it's exhausting. But I think I learned so many things, right? You learn nimbleness, you learn in your own self where what you're willing to accept and what you're not willing to accept, what the boundaries are. I wasn't very good at work life balance in either of the public exits that I did in the scales.
And now on the consulting side of the house, I'm trying to be a little bit better about maintaining work-life balance. But in terms of building companies. Some of the things that I learned, especially in terms of communication, was [00:04:00] how important having structured communication is and really identifying as a company where, how do you wanna have your meetings, what do your dashboards look like?
And then setting up basic decision trees like in a RACI or a dare model to understand who needs to give you input on certain discussions and decisions. And who needs to be informed about the decision, who needs to consult on the decision, and who ultimately is the decision maker and the person that's responsible for effectuating that decision.
'cause sometimes it's not clear. You can be on a conference call and everybody's throwing ideas around, I wanna go into this state, I wanna do this. But at the end of the day, nobody's making the decision. You guys are just throwing in a bunch of inputs. Or I've also seen where I decisions are made and people are trying to be super.
Fast with their decisions so that they can progress and they're not getting the inputs that they need along the way, and it really can hit the [00:05:00] bottom line if you're not getting those proper inputs. So really mapping out decisions was one of the key areas for me. In just overall developing my communication and being better at working with multiple departments.
Tommy Truong: I can see that being probably the most important thing in a business where your North Star is to list publicly in two years. And so the growth and the amount of decisions that you have to make fast is a lot more than the typical business in business lifecycle.
Leah Heise: It is an even in typical businesses, it's something that I think is needed, especially as you start to ramp up on scale. Early on, when I work with early stage companies, and maybe it's a, handful of founders and they're used to operating in a pool, they're always making decisions together.
But as they scale, you lose the nimbleness if everybody's making a decision. So at some [00:06:00] point, either it's going to evolve by itself and you're gonna start missing pieces, or you can be very intentional with the way that evolves, and you can sit back and say, okay, we need to figure out who, what the specific sphere of influence is for each of these people.
And then what decisions should they be consulted on, informed on who's the driver of this decision, that type of thing, to really, it really creates a better nimbleness for the company.
Tommy Truong: How did you guys build out your organizational chart? When you were scaling, like how did you, I and typically what organizations do is, we'll build out an org chart one year from now, two years from now, three years from now based on strategy, but to do so when the business is scaling so fast. What was, how did you navigate that?
Leah Heise: was perpetually iterative. I think it changed day by day sometimes as different thought processes were going on. I don't think [00:07:00] that's the way I would operate now, and I certainly don't recommend that my current clients operate in that manner. I think there needs to be some intentionality in terms of what you're running towards for an org chart.
And there, and this is something that I see in companies a lot right now, in particular, is you need to really understand from a, in a let's take it from a retail perspective, right? You really need to understand what is the bare minimum of employees you can have and stay operational. And a lot of companies don't know what that floor is.
And if you don't know that floor one, =you're= gonna cut till you break, and then suddenly you don't have anyone to do the things that you need to do to manufacture, to sell. And you've, you're losing employees that you're training. So I like to do, to really figure out what is that bare minimum. And then you create a scaling org chart at x amount of revenue you need to make sure you add these people [00:08:00] and then keep that org chart scaling as you project into the future.
It just makes it easier and it's not perfect, right? Like you'll refer back to the org chart and be like, yeah, I thought I was gonna need a director of production at this point, but I think we don't need one yet. And then you just modify it a little bit.
Tommy Truong: That's really insightful. I, it has to be dynamic and business is messy. So sometimes you plan for something within the quarter, terrors go up and things change drastically.
Leah Heise: Yeah you absolutely have to be nimble. The macro, the macroeconomic world is gonna change. What's going on with cannabis is gonna change. So you'd really have to be open and fluid in, in the way that you're building your companies. The other thing that I like with the scaling org charts and also having a strategic plan, 'cause strategic plans are very important, is it helps avoid bright and [00:09:00] shiny
object syndrome, which as entrepreneurs, everybody has bright and shiny object syndrome, right? That's the reason, that's your thing, right? That's what sets your world on fire is to come up with a new idea and chase it. But in cannabis, we in particular, we're already managing so many parts of the supply chain that you would not normally manage.
That if you have bright and shiny object syndrome and you're going after this asset and that asset and this new thing that's outside of your strategic plan, you're distracting from getting to the revenue that you're seeking to get to. I, yeah, strategic plan scaling org charts very important.
Tommy Truong: It's so true too in a vertically integrated, like a brand, for example, even if you wanted to add a new flavor, Hey, this customer wants this flavor. It starts from the assembly line and that decision right there. If there's a lot of cost and investment in that decision.
Leah Heise: Absolutely. If you're adding a flavor [00:10:00] there's and you just said add a flavor and I'll tell you the way my brain works. So if you came to me and you said, add a flavor, that would be like, for me, it's at the top of a project plan. And then I start to think of all of the verticals that you need to institute to get to that, add a flavor, which may be making sure that whatever the flavor profile is is, are there any like compliance restrictions on that?
What are the registrations? Is it a forbidden type of flavor that you can't have? Is it forbidden from. Is it attractive to children? This compliance tier. And then you have the production tier. Like where do you get the flavor? Where do you source the product? How long is it gonna take?
What does your packaging changes look like? How much ultimately is it gonna cost you to get to the end product when you take in labor and inputs and packaging and all of the things doesn't make any sense just because one person wants a flavor. And then, even like personnel, like how many humans do you need to get this done?
And what departments [00:11:00] inside of the company need to be involved in making the decisions? 'cause I can promise you it's way more than you think it is. It's more than just the chief operating officer or the chief product officer saying yes go. It's okay, do you have the staff to support that decision?
Do you have all the machinery you need to add the new flavor for this particular form factor? What's the, what's the timeline on how long it is before you're gonna be able to get the additive to make that particular flavor? Is there a tariff involved in this flavor? Where are you getting the flavor from?
What does your labeling look like now when you add to a new labeling? And then it wise are you gonna put that on the website? And what does that modification look like? There's so many parts that go into the end product that the consumer receives. But I love it. It's all fascinating.
Tommy Truong: I, entrepreneurs and myself. Myself included, this is, I'm talking about myself here. It took me a while to learn about just understanding the magnitude of opportunity [00:12:00] costs. It's really easy to understand opportunity. It's really understand the actual cost that it takes. But to do that, you're giving up something
Leah Heise: Yep.
Tommy Truong: and what you're giving up maybe is core to your strategic direction and which will hurt you in the long run. I, I dunno I think about this a lot. I have a theory in your, and you help so many entrepreneurs. I find that trait that an entrepreneur has in spades is the ability to start. You have an idea, you start without thinking about the risk, the acceptance, all of that stuff. That's a gift. So it's really easy to get a business from inception to. I say product market fit, But when you're trying to scale the business, that trait that you have that's innate in you, gets in the way.
Leah Heise: It does. And we see that a lot with I do some coaching with founders and new CEOs, [00:13:00] right? There is a point at which founders who are operational founders who are in the company, there will be a point where they need to back away and go to the board. Either the company has grown so much that they're over their skis in terms of their skillset, and they have a choice at that point to either uplevel their skillsets and get more advisors around them to help them uplevel, or they need to step away and hire someone who has a more specific skillset in that particular growth area of their company.
And I think we've, we're seeing this a lot in cannabis right now, especially with the MSOs where the founders have got it to got most MSOs to a certain point, and maybe now it's time to bring in somebody who's used to operating in this macroeconomic environment, someone who's used to all of these pressures, who's used to handling the level of debt that's existing in these MS in these portfolio companies.
Tommy Truong: I admire Jeff Bezos so much [00:14:00] because of that. It's very rare that you get an individual that starts a business in a garage can be current with the skill sets that he needs all the way through managing a trillion dollar business. It's very
Leah Heise: It is very rare.
Tommy Truong: thing,
Leah Heise: It
Tommy Truong: one of his best skill sets is hiring. the right people that can see the future that can help you to get to the next level. You, you helped take these two companies public, and then you started Gemini Twin Consulting and Wolf Meyer. What was the impetus of starting your own consulting,
Leah Heise: Gemini, I actually started years ago. I started it when I first came into the industry because my idea when I first came in the industry is I was gonna help people get licenses and coach and do business strategy and all the things. And I had a few clients and then I decided to go after my own license.
So that [00:15:00] pivoted a bit. And then after I left Ascend, because I was just exhausted I decided to go back and do more consulting with people. I consulted with myself and also with a global management consulting firm called Kearney, for about two years. And then. About two years ago, I joined Wolf Meyer, which is a company that was founded by a woman named Anna Ray Stein, who's been in cannabis forever.
Initially founded Steep Hill out in California and she also helped build NorCal Cannabis. Super Smart. And both she and I had been consulting in this space for and knew each other and had been talking to each other and leaning on each other and decided we were gonna combine our efforts and to consult together because consulting could get very lonely if you're not inside of a firm.
Tommy Truong: Yeah, I would imagine, right? Helping CEOs and founders their business, but who's doing it with you? So tell me a little bit about the work that [00:16:00] you do. What stage of business do you typically work with?
Leah Heise: I love, I, we work with all stages of business. I really like that middle, you're doing about 15 million in business. You have some basic infrastructure and you're really looking to scale. That's what I like. I don't mind working with startups per se, but they're not super well funded. If you're a funded startup, it's a little bit easier.
But we do con consultations with people that are early stage founders. We also do a lot of work with women owned businesses, and we'll focus on the women owned businesses and help them scale, do all kinds of advisory work. We're doing some governance work with a board in California.
Right now we're doing huge HR projects with a publicly traded multi-state operator doing some cost cutting and some reorganization, on the human resources side. So we do a variety of different things. Both Ann Ray and I have worn multiple [00:17:00] hats in this industry and know the industry pretty well.
Tommy Truong: yeah, no, you've been, you guys have been around and scaling a business in cannabis is more difficult than scaling other businesses. Just the regulations I. you want to be a multi-state operator. I would imagine that there's a lot of things that you have to go through in order to do that.
Different supply chains, all of these things. if, based on your experience, what are the biggest factors when somebody comes to you? Say, a brand, I'm making 15 I want to take my business to the next level. Typically, where do you start?
Leah Heise: So we like to always start with a needs assessment. Now, clients don't always like starting with a needs assessment because they don't wanna pay you to look around at their, all of their documentation and their p and ls and their proformas and their all of the things. They don't necessarily love it, but it's really important for consultants who are not [00:18:00] familiar with your business, who haven't worked in your business for a long time to get in to really understand what the real pain points are.
Oftentimes people will come to us, potential clients will come to us and say, I need this fixed, whatever it is, some X, y, Z thing fixed. But when we get into the company, that's really not what needs to be fixed. That on a, in terms of priority, it's low level. It might be something that's bothering 'em at that point, but we can see.
Other areas that they need to fix and that will effectuate far better impact for them in terms of revenue or whatever the particular goal of the assignment is. But that needs assessment is the very first thing we'd like to do is really get in under the hood,
Tommy Truong: So in with the needs assessment, are you also looking at the executive team, the infrastructure where that, their tech stack and where, what is the vision for the business? How big do you want to go? How many states? [00:19:00] What
Leah Heise: all of it. And sometimes it depends on what someone hires us to do, right? So if somebody hires us to come in and help them build a strategic plan, we need to do basic vision, mission and vision work. And it's amazing to me, a lot of companies will do mission and vision work very early on. It's the basic foundational thing that you do when you're doing a startup.
But they never go back to it. They never go back to it. It's not well communicated to their employees, to the co-founders. And when you do an a survey of all of the employees and the co-founders and the, even the management team, you'll, you might find like a thread of consistency amongst all of them, but oftentimes they're speaking in very different language.
So if you can just parse out what that core thread is and get to a mission and vision, it really does help the align the company both [00:20:00] strategically and operationally because then the employees know what they're running towards and so does the company.
Tommy Truong: I that really changed our business we, so we hired a business coach, shout out to Dean. We were in the process of implementing, scaling up that framework, scaling up OKRs, et
Leah Heise: Oh, good.
Tommy Truong: And we were doing it ourself, right? Three founders doing it ourself. And what we found was this is very inefficient.
Need an expert to come in and can facilitate the questions and organize things. So that we're a little bit more efficient with their time and we linked up with a business culture that helps businesses scale. And implement is scaling up. So the things that you've mentioned, the, what are the rhythms, what is the core values of the business? Like the core, what is the operating system? If we got hit by a bus, do our employees operate And
Leah Heise: Oh, the hit by the bus thing. I say all the time, if [00:21:00] you got hit by a bus tomorrow, whoever, in whatever seat they're sitting in, the executive management team, would the company still be able to operate without you? And you would be surprised at how many is? The answer is no.
Even large companies, the answer is no.
They're saving their, all of their documents are saved in emails. There's no backend information. There's no file architecture, there's no nomenclature, there's no, the data's all over the place there. Nobody's using the data. It's just organized chaos. It's even somewhat unorganized chaos.
Tommy Truong: so I'm a big advocate. I'm a huge advocate of. Bringing in a consultant that is in your space, has worked with other businesses before, has seen the picture before, and can help implement bring in different technologies into play. Do you, when you're coming in and you're helping a business [00:22:00] scale to the, to say 15 to 50, do you find that your, sorry, let me just think. Okay. Yeah. Do you find that these businesses of 15, they're, more or less guiding them on the rhythms of the business. What does that, what does the day-to-day consistent rhythms look like? What should be the meetings,
Leah Heise: Absolutely.
Tommy Truong: it, and that, that's like the foundation of how the business runs.
Leah Heise: And it's basic stuff, right? And it's not, it's not brilliant. It's not anything, it's, it is exactly like what is your backend architecture? What's your rhythm of business? How often are you having meetings? What are the dashboards look like? What data do you wanna see from your employees or even from yourselves to share with your, if it's just a bunch of co-founders, like what information are you guys sharing with each other?
Do you have delegations of authority to make decisions on certain things within your sphere of influence? Is your [00:23:00] company structured appropriately in terms of legal? Are you a corporation? Are you an LLC? Should you be an S corp? Very, the basics. Absolutely the basics. And it is the foundation.
And what we see with companies is. It doesn't matter how perfect you set up your foundation at some point in scale, it's gonna break.
Tommy Truong: Yeah.
Leah Heise: You're gonna have a, you're gonna have a wobble. Hopefully it's only a wobble, but you need to constantly be assessing that foundation. And tech you brought up is one of those areas I see where you do need to start inserting it, right?
Like early on, unless you're potentially an IT company, you, you need to, you can do things on like QuickBooks and teams meetings and, smaller levels of tools, right? But there'll be a point when you need an HRIS system and you can't just use QuickBooks for payroll anymore. And you need a payroll service provider.
There's things at certain point in [00:24:00] scale and it's different for every company. I'd love to tell you at, 15 employees, 25 employees, you need an HRIS system. Maybe you might be able to get away without one if you have a really good project management tool. And a decent payroll provider, you might be able to push that on further on.
But eventually 75 ish employees, you're gonna need a human resources information system to really make sure that you're servicing your employees appropriately and you're gonna need all their kinds of it. So one of the things that we do all the time is we do tech stack assessments and we go out and we do research and see if there's better alternatives for companies to use.
Maybe there's a better functionality or the costs are lower. So that's something that, especially with how Rapid Tech changes that you need to be assessing your tech stack all the time.
Tommy Truong: What is the framework? So if I was a founder of a brand and you're coming [00:25:00] in you can easily get to 15 million without necessarily the right infrastructure in play.
Leah Heise: You could get to a hundred million without the right infrastructure. It's amazing. It's amazing.
Tommy Truong: hobble your way there. Where do I start? So where do I start from a, I don't have any rhythms in place to infrastructure.
What do I tackle on first? How can I get methodical and scaling my business?
Leah Heise: Sure. So of course I'm gonna recommend you have outside eyes looking in. I find that when, even in my own business like in running a consulting company, it's do as you say, do as I say, not as I do. And also, I don't recognize the holes in my business the way that someone else can. And if I was gonna set up a rhythm of business, I probably would've done it already.
And now I've reached the point of where I'm paralyzed and I can't figure out how to come up with a rhythm of business. What is the right rhythm of business? And maybe I'm researching a ton and I've come up with 45 different ways to do [00:26:00] rhythm of business. So I always recommend that people hire outside eyes, have them come in and look.
And a rhythm of business is different for every company. It depends on how do you personally like to work, how does the team like to work? And sitting with the team and really figuring out, okay, we do better with 15 minute daily standup meetings. Some people want daily meetings, some people don't and they want quarterly meetings.
Okay, how are you communicating on a daily basis if you're only having quarterly meetings or if you're only having monthly meetings? So it just, it depends. But rhythm of business is important and it's not something people think about a lot. They're not very intentional with a rhythm of business.
They just do it.
Tommy Truong: Yeah. When we, I remember when we were 18, employees never had any meetings, worked just fine. Everybody was in the room. And we just went our merry way. And right around the 40, 30, [00:27:00] 40 employee mark, things started breaking.
Leah Heise: Yep.
Tommy Truong: We gotta meet, gotta have one-on-ones. Gotta do all of these things. And we went to the very end of the spectrum where we had too many meetings, and when you have too many meetings, you're making a lot of decisions, but there's not a lot of time to get things done.
Leah Heise: You spend all your time in meetings.
Tommy Truong: yeah. So there was this more or less figuring it out. What is the best path forward? And it's interesting what you've mentioned earlier in do if you ask an employee, what's the mission of the business? Are they consistent in telling or is there a consistent message? And you can start off with the executive team.
Leah Heise: Sure.
Tommy Truong: Does the executive team know what's the most important thing in the business? And oftentimes, sometimes they don't because the alignment isn't there.
Leah Heise: And it is very important to get the team aligned around that mission and vision.
Tommy Truong: So when you start, is that the first kind of, the first thing is, hey, this business [00:28:00] today? How often do you guys communicate and how clear is the communication?
Leah Heise: It depends on the project. Sometimes people will hire us just to do that work and sometimes they'll hire us to do something else. Board governance. And we find out through the process that the mission and vision isn't aligned and that we need to go back and do a mission and vision exercise so that we can get everybody on the same alignment.
So it just depends. I would love to be able to walk into every business and say, okay, what's your mission and vision? Does everyone know it? Let's do some surveys. Let's do an analysis. Let's make sure that the mission and vision that you currently have still works for today. And will help you get there in the future and realign it.
But a lot of times businesses just wanna get to whatever the specific target is at that time, cause cutting or whatever it may be.
Tommy Truong: So let's talk about some of the cool projects that you've worked on.
Leah Heise: Oh gosh. I've done all kinds of projects, [00:29:00] even oddly enough, like skew assortment analysis for retail providers. In fact, one of the. Areas that really stuck out to me for a RACI, RACI thing was a decision tree thing, was in a project I was doing for a company, trying to help them figure out where they had lost a some millions.
And ultimately what happened with that project was the root cause of why they lost money was because they did not have a decision tree. And so essentially what had happened was this company had decided to wait the decision making with marketing and marketing was doing all kinds of marketing surveys and trying to figure out what moved the needle, what do consumers like, what do consumers not like?
And they had determined based on a study that they had done, that popcorn Bud was the primary seller, and that's the one that you should just go to town on. So they put out a mandate marketing, telling the [00:30:00] company. That they were gonna focus on Popcorn Bud. And Popcorn Bud was gonna be the focus for a primary seller.
What they didn't do was talk to cultivation when they put out this mandate. So instead of having a discussion ahead of time, cultivation, just took the premium flour, broke it all down into popcorn bud, and then sold it. Your margins are compressed, you lost millions of dollars. And maybe popcorn Bud was something that, that this company should have focused on.
Maybe it was just a one-off thing. But if they had more inputs into that decision be before they made a mandate that this was going to happen, this was where they were gonna go this direction, they would've saved so much money. And that's where you start to see things breaking right.
Tommy Truong: Yeah, it's the cascade of consequences in an assembly line can be very traumatic if you're making a decision at [00:31:00] the very top.
Leah Heise: Yes. Yes. And decision, those kind of like production line decisions. It does, it should start at the consumer level, right? Marketing wasn't wrong to go and try to figure that out, but you need all the way along that supply chain. Do you have packaging for the popcorn bud that you're rolling out?
Like what does that looking look like and what's the timeline for getting that? And then you know, what they did to the premium flour, which did not help at all.
Tommy Truong: Let's say if I was a brand and I'm a, I'm in acquisition mode, what would what would be your top five checklists?
Leah Heise: Oh gosh. Financials for sure, you need to have financials. Human resources. If you are brand and you have a Chief product officer and you know all of these C-Suite people, does the other brand have all the C-suite people too? And what are you gonna do with them? And then what about all the layers below?
Do they make sense? Are is Florida if you're buying Florida, are they making, is, are [00:32:00] there retail staff making $17 an hour, but your retail staff is only making 14? How are you gonna rationalize that? Are you gonna tell Florida that you're never going to raise their salaries until. Whatever other state you're in reaches the 17.
There's strategic things. So human resources to me is a big one.
Tommy Truong: what should be the thought process with culture? Like, how do I assess if the culture is the same?
Leah Heise: It's never, I'm gonna tell you right now, it's never gonna be the same. And what I find from the companies companies that I have seen do not seem to be particularly intentional with their cultures. We talk a lot about culture and cannabis. A lot.
Tommy Truong: Yeah. The industry is, so it's been the there's been so many financial hurdles in the industry, when you're in, when you're in survival mode, culture doesn't, isn't the forefront of the problems that you're solving.
Leah Heise: It isn't. And we have those macro headwinds as well where we have a [00:33:00] lot of people, we don't have a lot of people, but we have people making a lot of money at the top right. And then we have people at the bottom that are making disproportionately low amounts of money who are actually running and working in the business every day.
So they're at a disgruntled level because they're not making enough to survive and maybe they have three or four other jobs on the side just to get by. So I find in cannabis in particular, we're seeing a lot of that angst, which is putting a lot of pressure on culture. And in an environment right now where getting another job is very difficult, we're not seeing people bop around to other jobs as quickly because the job market is suppressed.
I think we're going to see more of a, an employer focused company morale right now than we are going to see an employee focused, which is unfortunate. I think companies that focus on culture do better. Ultimately, I think if your employees want to [00:34:00] be there and want to come to work every day and believe in your mission, it's far more important than someone who's just, taken this thing and moving it to another place because that's what they get paid to do.
But I think we're going to have to be very intentional in the way that we work with employee culture right now.
Tommy Truong: Yeah I think about culture a lot. That's the space that we're in. And we can talk about this for hours or for days in terms of the right strategy for businesses. But you mentioned if I was a brand I'm looking at the financials. I'm looking at the their org chart.
Leah Heise: Their processes. How do they do business? Do they do business like you? Let's say you are a brand and I'm thinking, like a Kiva or something, right? You are a brand and your model is asset light, a hundred percent asset light, but you want to acquire someone who's actually a manufacturer.
Does it make sense? Is this aligned with who [00:35:00] you are as a company and with your processes? Why are you hired? Why are you acquiring this person, this company? What's the purpose of that acquisition? When we look at acquisitions, I normally start and ask people why are you even looking to acquire?
I get, expanding. But like, why are, what's the purpose? Is it because you want to acquire a new talent along with an asset? Is it strictly an asset purchase? What is it? What are you trying to do here? What's the accompli? What are you trying to accomplish? And I think it's important to know from the beginning which way you're going.
Tommy Truong: Does, so that's three. What would be the next two that should your decision in? In acquisition?
Leah Heise: Oh, there's so many. Debt, the amount of debt, your cap table, if your cap table is a mess. I don't know that I wanna acquire someone who's got 300 and something people on their cap table and maybe their cap table needs to clean, get cleaned up. What does the potential deal look like?
Certainly you need to know is this [00:36:00] business making revenue? I'm seeing some deals now where people are getting acquired or acquiring for no money and not even stock. It's literally just, here's my company. I don't wanna be responsible for the burden anymore.
Tommy Truong: Gosh that's an opportunity
Leah Heise: It is a huge opportunity and there's a lot of opportunity in cannabis right now. A lot of those types of opportunity, if you're willing to risk being able to operate whatever that acquiring target is a little bit better
So that you can survive.
Tommy Truong: yeah. Are there economies of scale in cannabis
Leah Heise: There is on some level right there, certainly from a health insurance standpoint, a generalized insurance standpoint packaging, a lot of times you can get that, some of the. Certainly in in product sales, if you are a multi-state operator and you're in 15 states, you're far more likely to be able to negotiate better product costs [00:37:00] from other cultivators and from other companies.
And you're also gonna be able to negotiate self shelf space a little bit better. So there's some economies of scale. There's not economies of scale like in CPG where you have some a thing creating a product in one place and it just goes out all over the world. There's just, it's, we're just stuck in these little markets.
Tommy Truong: Yeah. It's it is what it is. It is where it is. I wanna talk a little bit about where the industry's at. have a unique view, and because you've, you're, you've. You've been in this industry forever, but you're on the other side helping so many businesses. What's the status of the cannabis industry in 2025?
Leah Heise: It's a little, it's a little scary. There's certainly no capital. We all know that there's a lot of debt. We are in a situation where companies that we're growing very rapidly are not growing as rapidly as they were and really need to focus inside and make sure that they are right sized and that they're doing everything they can to cut costs in order [00:38:00] to make that dollar.
At the end of the day I, we aren't seeing as many m and as, we're not seeing as many acquisitions. I was talking to an investment banker yesterday and he said, at the end of q, at the end of Q4 last year, and they were in a situation where they had so many deals and they were able and buyers available, that they were able to shop the buyers against each other in order to create other deals, better deals.
But that's not.
Tommy Truong: Why? Why do you think it's dried up?
Leah Heise: I think part of it is because we're highly unlikely to get rescheduling. So there that two 80 e burden is not going away and there's no kind of favorability stamp on the cannabis industry from the federal government. So I think that has fatigued the investors. They're not willing to put any more of that type of money in it.
I think from an MSO perspective, and even from a private company perspective I guess more from an MSO perspective, the, [00:39:00] their share prices are so compressed that they can't do the acquisitions they would have wanted to do because it would screw up their cap table. So much I think we're seeing a lot of that and even for the last two years, what we've been seeing primarily is if an MSO is acquiring a company, they're doing it in stock.
You're not getting cash. So it's not even attractive to a seller to sell to a multi-state operator to only get stock that potentially might go to zero and get delisted. The debt burden is so high for these companies. And the other thing that, and I wanna see the four 20 data, 'cause I haven't seen it yet.
Anecdotally I'm hearing that four 20 sales were slower than they were last year. But I need to see what the data is on that. And I have heard for some operators, like Q1 was down 20% in foot traffic, not just in price compression. So are we seeing a slowing of interest in the cannabis industry [00:40:00] as it becomes more reg, more legalized and more destigmatized instead of what we thought was gonna happen, which would, as we got more normalized, people would flow in.
I think we have some headwinds with intoxicating hemp. And still the illicit market, right? It's, we've got all of these pressures on the cannabis industry and it's a very difficult industry to make money in right now,
Tommy Truong: I, some of the problems that you've mentioned, I've actually seen in other industries as well.
Leah Heise: huh?
Tommy Truong: restaurant industry sales are down and the valuation, you see it in tech too. A lot of tech companies raise at the very peak, 40 times multiple in revenue. 2021. now if there're to raise again or exit. Everybody would take a discount. So they kinda have to grow to their last valuation. so that has really slowed down acquisition in the tech space.
Leah Heise: Yeah, I think you're right. I think that's what we're seeing here. I've also [00:41:00] heard hospitality down for outside of restaurants like hotels. They're just, people are not renting that. I think the instability in the economy right now is very concerning to people. They don't know. You don't really know if you're coming and going on any day.
We, are we in a recession? Are we heading to a recession? I think people just aren't spending as much money as they were. I know I'm not, I don't know why, but all of a sudden I, I just realized I haven't bought a, bought any clothes in the first quarter, which normally I would buy more clothes
Tommy Truong: Yeah, it's an interesting time that we live in. I am all, I can't say I'm all for this, but I love. Uncertainty and volatility for whatever reason. I don't know,
Leah Heise: because you're an entrepreneur.
Tommy Truong: it could be, it always fine. There's always an opportunity
Leah Heise: There is.
Tommy Truong: volatility always, if you position your business correctly, you have a strong balance sheet. Strong fundamentals. You can [00:42:00] come out of today ahead of everybody else.
Leah Heise: I agree. I agree. The key is figuring out what that opportunity is, right. And optimizing on it.
Tommy Truong: Yeah. I, before I let you go, I have to ask you this because 2025 is the year of agents. have you seen? I've seen a lag in AI adoption in the cannabis industry you also see a lag in other service industries too. What are your thoughts, where we are today in the adoption and what may get disrupted in the future?
Leah Heise: I am starting to see some AI usages in all kinds of places. I'm seeing it in human resources. I'm seeing it in doing demand planning. I'm seeing it in AI bud tenders that sit on top of your POS and introduce products to you. I think we have a long way to go in terms of the use cases for all of these types of things.
And I think there's so many other places you can use AI for that we're not currently [00:43:00] using it. I'm intrigued by ai. I think. I think AI could be very helpful for us in terms of getting some real insights into the, all of the data we've been collecting for a very long time.
Tommy Truong: I, it's, I am. It's where the world is going. you made a really good point in that it's not only that the rocks can talk. The rocks can consume information and never before that you can have so much context in your business. As say if you are, if you're a founder or CEO of a company that is multi operational, has thousands of employees, you can truly understand where your business is at now,
Leah Heise: Yeah.
Tommy Truong: much more than before.
Leah Heise: On a much more granular level. And we have a ton of data in all of these companies, but maybe it's not set up correctly and it was hard to understand. Put an AI per agent in there and let them start scraping [00:44:00] stuff and teach them and guide the AI agent on the creation of whatever your end product is that you wanna get.
But yeah, AI is very intriguing.
Tommy Truong: Yeah. know that we're out of time Before .I let you go, how can our listeners find you?
Leah Heise: You can find me on wolfmeyer.com and you can also find me on LinkedIn. Leah Heise, easy peasy.
Tommy Truong: Thanks for joining me
Leah Heise: It was so fun, Tommy. Thanks.
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