Cannacurio Podcast Episode 18 with John Manlove and Rob Fess of Apex Trading

In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss new license data updates from Michigan, Pennsylvania, Utah, Virginia, and more. We also speak with John Manlove and Rob Fess, the founder of Apex Trading, a software company providing a wholesale management platform for cannabis and hemp buyers and sellers.

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Cannacurio Podcast Episode 18 Transcript

Amanda Guerrero: Welcome to the Cannacurio Podcast powered by Cannabiz Media. We're your hosts, Amanda Guerrero and Ed Keating. On today's show, we're joined by two very special guests, John Manlove and Rob Fess of Apex Trading. Rob and John are cannabis industry veterans with quite a few stories to share on today's episode. Apex Trading is a wholesale management platform that services the cannabis buyers and sellers.

Well, we can't wait to hear what they have to say, but as always, we're going to check in with Ed to see what he's got cooking for us today in the data vault. Ed?

Ed Keating: Thanks, Amanda. It's really been a lot of updates coming into the system, so we've been refreshing a lot of our licenses. A couple that are top of the leaderboard are Michigan hemp licenses, Pennsylvania processors, Utah hemp, and also Alberta cannabis. So, a lot of new or updated information coming in really as we always do.

Amanda Guerrero: With the recent updates, specifically Alberta, can you tell us a little bit about how you guys were able to obtain this information?

Ed Keating: Yeah, a lot of it is either the government has updated the information they have. Like in Alberta, they've changed the way they disseminate the information. It's a lot easier now than it was. They used to post the information about potential licenses if people wanted to complain or lodge some sort of complaint. That information would be up for two weeks and then it would essentially disappear. So now, they are actually providing a more stable list, so we've got better information in terms of what's up there.

And in terms of Michigan, Pennsylvania and Utah, that is essentially our periodic review where the researchers go back on a daily, weekly, monthly basis, whatever it is, to see what's new and make sure that we get whatever information there is, enhance it, and then upload it for our customers to use.

Amanda Guerrero: Got to love the data research team, always keeping us updated and informed on new happenings of cannabis and hemp. Well, thank you for the update, Ed. We're going to take a quick commercial break and once we come back, we'll be joined with John and Rob of Apex Trading. Stay tuned.

Welcome back to the show everybody. I'm currently here with John Manlove and Rob Fess of Apex Trading. Welcome to the show, gentlemen. We're happy to have you.

John Manlove: Hey, Amanda.

Rob Fess: Hey, Amanda, great to be here.

Amanda Guerrero: We're so glad to have both of you guys on the show with us today. We are both very familiar with you too, but why don't we give our subscribers some background information? Can you tell us a little bit about yourselves? John, you're CEO and co-founder. Rob, you're the director of marketing. You first started together at Tradiv. Did you know each other previously?

John Manlove: Hey, Amanda. This is John. We didn't. I was the first employee at Tradiv back in 2014. The two founders of that company were good college friends of mine and one day approached me and just said, "Hey, John, we want to start the Amazon of cannabis." And being someone who was always an enthusiast of cannabis, obviously with the intrigue of this new emerging industry, I jumped from my environmental firm and joined those guys to take over and run operations and sales, and then had, obviously, the fortunate experience of getting to work with Rob a little bit later as he came on board.

Unfortunately, we didn't know each other previously before, but obviously, we've become close friends since we've worked together now for almost, gosh, five or six years.

Amanda Guerrero: I'm sure you both have quite a few stories that you could share there about just seven years of friendship.

Rob Fess: Oh, yeah.

Amanda Guerrero: Wonderful. Well, I had read recently that Apex Trading just hit two years. Congratulations. What does this accomplishment mean to both of you?

John Manlove: Rob, do you want to jump first?

Rob Fess: Well, it's really interesting. We were just reviewing some metrics the other day for one of our pitch decks and just seeing those numbers on paper, what's happened over the course of the two years, it's incredible because it's not just the product that we created itself, but it's all the things around that - the employees, the team, the meetings, the getting together, just everything that has to come together to make that product happen.

I have a history in startups, so a little familiar with that. But just seeing it all come together, and being able to say, look what we've created. And again, not just the product itself, but everything that surrounds the product. That really, to me, has been, I don't know, just fantastic to watch.

John Manlove: Yeah. And I can piggy back on that. I think that Rob and I, and our other co-founder, William, we've been through a lot from the Tradiv days to now, and getting to be in this space since really the first adult use market came on in Colorado and seeing how the markets evolve, it's been really thrilling to be part of it.

There is always ups and downs in emerging space. Sometimes something always says, we're a startup within a startup, right? We're agile, we're constantly making pivots and refinements, not only to our product, but what we're doing internally as a team.

When I look back at the last two years, I'm extremely proud. I'm proud that Rob and myself and Willie were able to come out of Tradiv with a new vision and a new direction of what we felt like was missing within the wholesale e-commerce business management platform side and be able to bring a new product to market that not only is unique, but it's allowing our clients to prosper.

Something that we're all so passionate about in our space is our ethos. It all centers around the plant. We're a plant-first company. We don't come from Wall Street; we don't come from big Silicon Valley. While we're very tech-focused and we have a great product, we really are passionate about this space.

We're passionate about seeing our clients prosper, and we love seeing them be successful. And just being able to support them and hear the stories of how we've been able to help companies prosper, or maybe even save companies from potentially shutting down. To me, that's huge.

So it's not only our family that we've created, but what we call it is, it's our Apex Trading family. So all of our clients are part of our family, and we love being able to take care of them. I mean, for me, it's I love seeing the team and we've built such a great, great company here, but also just downstream, what we've been able to do to help our clients prosper.

For me, looking back on that is, there is nothing better than having a farmer come and say, "Man, you've allowed me to go from 10 lights to 80 lights and I've expanded and I've tripled my team and I have all these revenues coming in and I would have never done this if it wasn't for you and your guys' company." Then for me, that's more rewarding than any type of money that we could make in the short term with it, and that's just awesome.

Ed Keating: Well, congratulations. That's really a wonderful story. And as one of the co-founders from Cannabiz, I can echo that. When you hear customers should tell you things like, "You've helped us transform our business," ot really makes you feel good about why you're spending your days, your nights, your weekends, et cetera, trying to make it all work.

Now, I'd like to dig into the business side a little bit and help our listeners understand a little bit more what you do and how you do it. One thing I noticed and I want to confirm is that you're now in 11 states, I'm curious, how do you choose which states to enter? And also, if this is the case, are there any states you choose to avoid?

John Manlove: Yeah. That's a great question. I think that it's always important for a small company, we're a 12 staff company at this point in time, and we have to be really strategic about where we like to position our platform and really stay focused on the growth within those states.

We really started off first with ... When we launched the company, was, “Well, let's start in the states where we've got a relationship.” This is a relationship-driven industry, so you want to start somewhere where you've got some initial relationships built. That was initially Colorado and in Oregon.

We have an office in Colorado and we were headquartered in Portland, Oregon, so it made a lot of sense to start in those markets. From there, what we've really allowed us to do is, through, as you've seen the consolidation of licensees and brands within states, and you've seen the emergence of MSLs, us going into new markets is dictated by some of our clients, as they open up new license locations, so we'll do that as part of it.

So some of our growth in markets is dictated by our clients and their growth as they use our system. They're like, "Hey, I'm moving to Michigan, I'd love to use your platform in Michigan." So ultimately, now we're in Michigan, right?

The other side for us is strategically looking at it is where are ... what we've found from our perspective is more of the mature markets, these businesses, they've established their brand. You're starting to see supply and demand level out where there's not an oversupply sometimes or an under demand.

And typically, what we're finding is that our model, we're not the marketplace, we're a direct model. So we allow brands to connect with their retailers through custom tailored storefront, where they own the brand and the buyer experience is very relationship driven. What we've found is, as markets mature, a lot of these businesses are looking for ... they definitely don't need to be on a marketplace, so looking for an alternative solution, and that's what we provide.

We're kind of that Shopify, Amazon, it's a very basic comparison. So really, what we've seen is the states themselves, as they mature, they're looking for our solution. And so, that's where we've planned, is like we've ran ... Some of our largest markets now, we're Colorado, Oregon, Washington, California, Nevada, then we're seeing, moving into Oklahoma, Michigan, Massachusetts, among some others.

So, it's just an exciting time in this space, and we're thrilled to be part of it and offer, again, a little bit different solution than other competitors out there, and it's just been great.

Ed Keating: So, when you go into a state, what does it mean in terms of compliance, or if you will, almost an onboarding perspective? The reason I ask is I just did a report on software companies in the cannabis space and how they're connected, and Apex actually scored really well on that because you're in multiple states. But what does it mean? Is there a lot of rules and regs you have to internalize into your system in order to say, “Yeah, we planted our flag in Michigan; our clients are good to go now.” How does that work?

John Manlove: Gosh, that's a great question. One of the unique things, sometimes it makes it really hard for a software company as each state inherently is different. Some states are Metrcs, some aren't, right. Some have different rules and requirements regarding products, and some have different ones.

The thing that we're always really focused on is, obviously, we've structured our platform to be agile, so each state has essentially, its interstate commerce. So, we've been able to really tailor each specific state if they have specific requirements or things. We've really, from a data standpoint, we've structured the platform to account for those nuance differences.

I think the other side is, really from a marketing and a sales standpoint, Rob can speak to the marketing side, different messages and there's different wants and needs within each state as well. So, it's not only from a platform standpoint, we have to be very cognizant of what those differences are and be able to react and be agile enough from a development side to offer the right solution for that state, but also from a marketing and sales standpoint, it's different messaging, right?

So someone in Massachusetts reacts differently to sales and marketing or messaging than someone in. I'm sure from the ... I assume that you guys are aware of that as well, and I'm sure Rob can speak to that. So, I think for us, it's really spending the time to understand the market, the people within those markets, their wants and needs, how that market functions, and then be able to really tailor not only the platform, but the way that we approach those markets in that manner.

That's something I think, from being industry veterans, we are very aware of and having worked in a lot of different states and run distribution companies, et cetera, we recognize that. And I think it's really prepared us for being able to obviously grow this company for not only addressing these markets today, but the ones that are coming on inevitably over the next few years.

Ed Keating: Right. Rob, going to that marketing side, one of the things I'd like you to help me understand is, what part of the value chain Apex helps with? What are the boundaries like? Do you go all the way from seed to sale type functionality and hit all those markets? Or are you focused because you're a startup and you can't be all things to all people. So, where do you draw those lines?

Rob Fess: Yeah, sure. That's one of the challenges I saw early on as I came out of mainstream and entered into cannabis was that companies started to lose focus, they saw so much opportunity. You might come in as a POS system and then you start shifting to a marketplace platform and then you're doing consulting, and all of a sudden you've got 50 different directions you're running in. And to me, that just is leading towards failure.

What we've tried to do is stay pretty focused on the order inventory and sales management tools. And then, as John touched on, letting these companies own their brands, rather than being in a wide open marketplace where ultimately Amazon becomes the place you're buying - doesn't matter what the product is, you're going to Amazon. We don't want people to look at it as, “I bought this from Apex Trading.” We want it to be, “We bought this from the Ultimate Green,” or whatever the name of the company might be.

So, we've tried to stay focused in that realm, and at the same time, we recognize opportunities of being able to ... we've just added a services page where we vetted specific types of companies that we think augment or accentuate our product, but can't really ... it's not an area that we want to go ahead and try to tackle.

So, we're vetting people and saying, “This is who we've given our thumbs up to if you're looking for a banking solution or you're looking for a lighting solution, or you're looking for a digital advertising solution, or an SEO solution, or whatever.” We're trying to keep our focus, but also expand our ecosystem by partnering with other companies.

Ed Keating: Nice. Yeah, no, that makes a lot of sense. And a follow on question I have is, in terms of the ROI, since you are essentially built to streamline inventory order and sales management, et cetera, what kind of impact can Apex have on a business? What kind of returns are they seeing and making them excited? Because you've got a lot of clients and obviously you're doing more than something, right?

John Manlove: Yeah. It's true, and one of the things that we come and find right across these businesses is a lot of them, and I think that it's evolved a little bit past this, is you're typically finding a lot of manual processes and double work. So, when you're thinking about someone managing their inventory on Excel sheet and then creating a marketing email off of that with the inventory and then sending it out and receiving orders, and then having to manually update inventory, and manually create invoices and send out testing, et cetera, we've been able to automate all of that. So, it's a substantial internal cost savings.

We also have built a new workflow management where we've automated the internal communication throughout a company when it comes to fulfilling orders, as well as downstream communication to a buyer. And we have a task management system as well, right? So, we've really focused on driving internal efficiency for a business. And then of course, giving them the sales tools, like a CRM, a marketing tool, that custom storefront to engage with their buyers in a really direct and automated fashion as well.

So for our standpoint, it's really driving that ROI and creating internal efficiency and helping them build their brand. One of my favorite stories is we're going down here in a few weeks down, down to this pharma, it's called Benson Arbor in Southern Oregon. It's a rural Southern Oregon farm that is really renowned out in the Pacific Northwest, a great client of ours, and we love that whole crew. Noah recently told us, we were on a phone call with him last week and he said, "Guys, I've sold $2.5 million dollars through your platform, and I don't have a sales rep."

So, what's amazing for us is these people have these amazing products, and the products do somewhat sell themselves in some way, shape or form, sometimes depending on the brand and what they've created. But for us, when we can look at that and say, “Here's a business owner that doesn't have to have a sales team. We've automated that for him; that's a substantial cost savings.”

And sometimes, when margins are tight, you're paying taxes and you have all these burdens on your business, not having that cost potentially of that staff member, not saying I'm a salesperson, right? So, there's obviously pros and cons of me hearing that from that perspective, as I like to obviously have more people employed in the cannabis space than not. But hearing that from a business - to me, that's going to allow him to expand his grow, invest in new technology and R&D, and that's amazing.

I think that's really where we're looking at, is we're not only driving efficiency and we're going to allow these sales to do more brand focused things, doing popups, working with budtenders, educating them on the products, because we know majority of consumer purchases are made based on budtender recommendation.

So, we're allowing these brands to go and engage with these retailers in a fashion that's really helping build that brand and that relationship, rather than just doing all of these manual labor steps. And I think that's the big piece for us.

Ed Keating: That's great. That's great. And you touched on brands and I appreciate that because Rob and I had a discussion about this back late last year when we were reaching out to some of our customers. And not only did we discover that we both had a Russian language background in terms of study, but also that we were challenged to get brand information.

So Robert, I just want to check in, how's that going now? Have you made any inroads into it? Because it's not something that's on our radar screen just yet, but I know you were working on it.

Rob Fess: Yeah. It is a challenge because you find so many of these great name marks out there that aren't associated with a licensed company. And so, what I've been doing to track those folks down for our sales team is use a combination of Cannabiz Media, of course, online searching and just really those two in tandem, being able to find maybe the name of an owner as an example in an online search.

So, I might have the company's name and I do that, and then I take that owner name into Cannabiz and I start searching in Cannabiz by owner name, and lo and behold, Bob Johnson pops up and I can find and trace back to the original company that this IP brand or intellectual property brand that doesn't have a license attached to it, but does have a common leader or ...

That's how I've been knocking those out, but it's still a challenge and certain states are more so than others. Nevada is an example where it's really hard to find. If you know the name brand, the consumer facing name brand of a product, that doesn't mean anything for you until you start really digging.

Ed Keating: Yeah. No, it's a great story, and your anecdote is one that I've had to do as well where somebody said, well, this is a license you should have. And I found that it wasn't a license, it was a trademark, and it was only by a person's name. Just like you described was the only way I could knit them all together and go back to the client, say, "Yeah, they don't have a license, but this guy, John Doe, he's connected to this trademark," and that's how it all came together.

Well, thank you for the background on that, because I was curious how it's progressed, and it is definitely something that we continue to look at, as to how could we do a better job than that? So, I'll certainly keep you posted as we move forward.

Rob Fess: Thank you. Thank you.

Amanda Guerrero: With that in mind, you guys take a multi-tiered to educating yourself and your sales staff. I wanted to ask you guys, as long-term users, what would you say is your favorite feature of the platform?

John Manlove: I'll go real quick, and Rob, obviously he spends a lot more time within Cannabiz Media then sometimes I have a chance too. But for me ultimately, you need to get to the decision maker, right? And for my sales team, when we signed up and started using Cannabiz Media, it was so vital. The sales process can be sometimes pretty long, and having to go through several gatekeepers or get to that decision maker can take several outreaches. Maybe over the course of sometimes several weeks or a month.

What I love is being able to go in, find it and know who that owner is, who that general manager is, so that when I call, even if we don't have that email or that phone, I know who I'm asking for. And you're over if you're almost able to jump straight through the gatekeeper in that way or call that person directly. To me, that has been so vital and it has allowed us to really speed up our sales process and our sell through, and that has been just pivotal to our success in the short term.

Rob Fess: Yeah. And I'm happy to jump in too. I would, in a related comment, it's the time-savings. I was spending most of my evenings and a lot of my weekend time sifting through state databases and articles of incorporation and again, web searching and Instagram and just piecing all this stuff together to try to find companies for us to market to.

And then, we found Cannabiz Media and initially started off with just the one seat the first year, and gave it a try, and quickly, quickly recognized how my weekends and evenings opened back up because I was just able to spend my working hours. If I needed to find something, I just simply type it in. That has to be the number one thing.

And I tell, just so you guys are aware, I tell everybody about you. Because we encounter so many people in the space, and I just want them to know that the biggest time savings, biggest external tools thing that I've found that that has helped me is Cannabiz Media.

And now, we have our whole sales team, we've got the five seats and so ... or not the whole sales team, but the directors and staff, they're all dialed in. Can't tell you how much time it saved us, and thank you again for putting this all together. It's been fantastic.

Amanda Guerrero: Well, I can't take full credit for it since I just joined the team this past year, but you're welcome. Thanks, Rob. I'd love to hear how happy you guys are about the platform.

Now, switching gears a little bit, looking towards the future, I wanted to see what new initiatives are you guys currently working on, specifically Bushel44? Very curious to learn a little bit more about that.

John Manlove: Yeah, we are so excited about the launch of our hemp platform. About a year ago, we were obviously hitting the trade show circuit pre-COVID, and we kept having hemp companies come up to us. And obviously the passing of the Farm Bill, we saw a huge move into that space. And they kept coming up saying, "Hey, can we use your platform? We love what you guys are doing in cannabis, we've heard of you, or we see you at this trade show and we'd like to use it for hemp."

And unfortunately at that time, we were like, "No." And I laughed thinking about that because that's like the response you usually wouldn't have, because hemp's different, right? It's not interstate commerce. It can cross state lines. It's evolving more towards the commodity, and there's a lot of nuance things within it.

So for the last year, we've been custom building a new platform called Bushel44, specifically to address the issues within the hemp space.

And while that market's still evolving and somewhat we're building the plane as we're flying it, it is something that so far, we're really positioning as we're not a listed hemp marketplace for hemp. That's what everyone's doing. What we're doing is we're building an ERP specifically for hemp. So, we're allowing these businesses now to have all of the tools that they need to not only run their business efficiently, but sell it effectively downstream too, to their buyers or consumers.

Bushel44 has been launched for a little over a month now. We have about 30 clients who are either onboard or going through onboarding, and it's continuing to grow. And we're gearing up for our series A raise and that appointment at capital will be ... it's all growth capital. So, it's all going to be deployed into sales and marketing, a little bit of [inaudible 00:25:41], but mostly in growing both Apex and Bushel into the future.

Ed Keating: Oh, that's great to hear. And as I'm sure you well know, we have a lot of hemp licenses in the database. It's been really a growing part of the platform. I think I just checked for a blog post I wrote, that cultivation seems to be the biggest part of the license landscape. I think close to 70% of the licenses that we have are for cultivation.

So definitely a lot of people out there, although I've heard also that the acreage has shrunk this year drastically. So, definitely some interesting times in the hemp space and having a solution like yours, I think, can only be helpful in letting people achieve their financial goals. Because as you said, it's a commodity, and that poses some unique challenges.

Now, also looking forward, we have new states contemplating medical and rec programs at the next selection, which is not that far away. Any predictions, insights, and how early do you need to be planning for these events? Like if a state comes on, are you right in there, or do you need the market to develop first?

John Manlove: I'll take a swing at that first, I'll let Rob jump in. And I don't have that magical wall where I could rub it and go into the future, I don't like to necessarily make the predictions as far as the political landscape, and those would come, some come back to bite you.

But I know one thing, I know that COVID has really disrupted state budgets. We know that there's now going to be less taxes coming in sometimes, and there's going to be budget shortfalls. And ultimately, cannabis is a great tax revenue generator. You can look at any state with that.

I think that the social stigmas around cannabis, whether that's criminal or not, they're breaking away. We're finding a lot of those to be false. I think what we're going to see is we're going to see more progressive action at a state level to look at cannabis as a way, a program that not only is going to potentially help people with health and wellness that we all know about from a medical standpoint. but from a recreational adult use standpoint.

I think it's a great revenue generator. I think it's going to help states react and be able to bring in revenue in this new COVID era that we're all in. And ultimately, we're seeing record sales in every adult use market right now. Colorado, California, they've all come out and said they have had these record numbers. I think that’s evidence that this is an industry that's here for the long haul. And I think that states, whether it's a conservative state or not, they're missing out not at least considering cannabis and looking at it as a viable option not only for the people, their constituents, but then their respective state, but also from a tax level.

And Colorado is a good example of that. When they had a budget shortfall a few years ago with roads and hospitals, what'd they do? Well, they looked at cannabis. That was the way that they were going to make up for that.

So ultimately, I think there's a lot of ... the last few years, there's evidence where it's really helped states, and I think now, as we look into the future, we're going to see that evolution and that move no matter what happens in the next presidential election. Joe Biden's come out, not as necessarily supportive of cannabis legalization as people would want, but ultimately, I think it's the states that are going to determine over the next few years what's best for them and their constituents, and I think we're starting to see a big move in the positive direction.

Rob Fess: And if I could just piggyback on that, as John mentioned that tax relief that could come from cannabis for those states is just as tasty a nugget for the feds too. So, all of the challenges with all the stimulus packages and things that we're spending a lot of money, how can we recover or recoup of that money - federal cannabis legalization.

Even though, as John mentioned, Joe Biden may not be as strong on that as we might hope, I think the numbers might push everybody to go for federal. And if that happens, then we've got the banking question solved and just all sorts of things. So, we're in this really precarious time, Johnson making predictions is tough, but I would say that if a number of additional states go to legal, then the fed is going to be eyeballing that tax revenue, and we should have the big shift that we've been hoping for, for years.

Amanda Guerrero: Yeah. Well, we'll see what happens come November. Just echoing what you guys are saying, as a Coloradan who has benefited from the tax benefits from cannabis, really helped our state during COVID-19, so very curious to see how this plays out come in November.

But thank you so much, John and Rob for joining us on today's show, it was really a pleasure catching up with you both and learning more about Apex Trading and Bushel44, and what you guys see coming up for us in the future.

John Manlove: Pleasure, Amanda, and thank you so much for having us.

Amanda Guerrero: Of course. Thank you. All right, Ed, that was a fantastic interview. I am so happy that we were able to get this done today. Wanted to check in with you and see what do we have to look forward to from the data vault in the coming weeks.

Ed Keating: Well, we just finished up a Cannacurio on the rest of the Virginia hemp licenses. So, we did a blog post last week on distributors, and now we've looked at essentially the whole market. So now, there's approximately 2,300 in the system now, most of them are cultivators across those three activities, and we just refreshed Nebraska hemp licenses today with about 40 additions.

So, as I said earlier, a lot of updates coming into the system, no new states coming on board necessarily, but certainly a lot of refresh of the data that we have.

Amanda Guerrero: Wonderful. I know a lot of our subscribers will be happy to hear that the Virginia hump licenses are in - can't believe it's almost 2,300, that's crazy - as well as the updates on Nebraska.

So, thank you, Ed, as always, and everyone, thank you for joining us on today's podcast. We're your hosts, Amanda Guerrero and Ed Keating. Thank you so much for joining us. Stay tuned for more updates from the data vault.

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