🎙️ The Bettering Company CEO Mark Cozzi
The Bettering Company has $11M+ to build "edibles 2.0" by taking familiar products and improving on key aspects such as flavor, consistency and packaging
Products:
Transcript:
0:17 - Mark Cozzi (The Bettering Company)
I have a long history in finance. I started out on Wall Street and was an investment banker for about 14 years. Then I eventually left and joined a former client of mine. A guy named Tom Kaplan, who was starting an Energy business. And he recruited me to join him as his first employee in a company called Leor Energy. We built it up and sold it right before the market crashed in 2008. Better to be lucky than good. So that was a nice outcome for investors and employees. And then I eventually joined him in his Family Office in New York shortly after the sale of Leor. And then after doing that for a while, I decided that I wanted to go out on my own and become an entrepreneur.
And it was about seven years ago, I was having dinner with a friend of mine in New York, who's an oncologist at Memorial Sloan Kettering. And we ordered a glass of wine, and he said, We should really think about consuming less alcohol and substituting alcohol with cannabis because cannabis is much friendlier on the human body. And that was an epiphany for sure. I historically had not been a huge cannabis consumer. And then a couple of months after my dinner, a friend of my husband gave us some of her Chocolates that she had infused with THC distillate. And she is a master chocolatier. She's been on Oprah's favorite things list twice for her non-THC chocolates and candies. And so when I tried her chocolates, I thought, oh my goodness, these are the best chocolate edibles I've ever had. And even among the best chocolates I have ever had. And so that was a catalyst for starting the company.
2:55 - Dai Truong (Arlington Capital Advisors)
There are some parallels to Cresco Labs, which. which is in your backyard there in Chicago. They have a celebrity chef, Mindy's Edibles, which is named after Mindy Segal. So how does that compare? I mean, it's kind of a similar story, right? As you were telling me, that's the first thing I thought of.
3:09 - Mark Cozzi (The Bettering Company)
Yeah, for sure. And Mindy and Cresco make great products. What we're doing is really creating Edibles 2.0. And so we launched gummies in the Fall [2023] and our gummies are made with as clean of ingredients as possible. Going back to my psychologist friend Neil Eingart. Neil is our Chief Medical Officer, and he reviews any and all ingredients in our products. So our gummies have clean ingredients. We're using real fruit. We're using brewed teas. For instance, one of our SKUs is Fennel Fig, which is a unique flavor for that gummy. We're using imported fig paste from Greece. We have another SKU, Hibiscus Chamomile Thyme. And rather than starting with just plain water, we're brewing basically vats of tea, chamomile tea, and using that as our base. For Blood Orange, we're using an imported blood orange concentrate from South America. So, what we seek to do is to take what's out there and change it, hopefully make it better, hence the name The Bettering Company. And then we're also doing something not commonly done, and that is we're individually wrapping each of our gummy pieces.
4:52 - Dai Truong (Arlington Capital Advisors)
So, help me understand that. Does that mean in a 10-piece pack that's 100 milligrams? Within that package you're actually individually wrapping those ten
5:00 - Mark Cozzi (The Bettering Company)
That's exactly right. And so we we have a flow wrapper that we purchased from the United Kingdom specialized for making for flow wrapping our gummies which are five grand pieces and and It's it requires a lot of labor requires the cost of the machine requires the cost of the actual wrapper for the pieces um, but we Have seen already in really incredibly positive demand from consumers for this and they're recognizing it is different and positively so Is that for quality so it retains freshness as you're a consumer that it sounds like more of a low-dose consumer That may not consume it all in a matter of few days you consume it through a matter of a month You can actually have the product high quality
6:00 - Dai Truong (Arlington Capital Advisors)
the brush for the whole month.
6:01 - Mark Cozzi (The Bettering Company)
For sure, so that's one positive aspect. The other is transportability. So you're going to a concert, you're going to a barbecue, and you can grab a handful and put them in your pockets or purse or backpack, whatever. And they're not all stuck together.
6:17 - Dai Truong (Arlington Capital Advisors)
Yeah, it's funny. was thinking about that a few weeks ago with the guards says, sort of just edibles and candy, more just not infused, but individually wrapped kisses or starbursts. And that typically will create a bit more waste just because I can eat a whole packet of starbursts.
6:35 - Mark Cozzi (The Bettering Company)
I don't need them to be individually wrapped. But this use case makes a lot more sense. Yeah, I mean, it's been really, really positively received.
6:44 - Dai Truong (Arlington Capital Advisors)
And let's talk a bit more about the products. So from a Gummy standpoint, there are six SKUs right now. You also just launched chocolates, and that's two SKUs. So how can we understand why did you have six SKUs to start? got me's, but maybe, you know. two versus four versus six on the chocolate line.
7:03 - Mark Cozzi (The Bettering Company)
Sure. And we actually launched four SKUs of chocolates. There are two dark chocolates, two milligram pieces and five milligram pieces and then with oatmeal, two milligrams and five milligrams. So you can either count those as two SKUs or or I guess more so flavors.
7:23 - Dai Truong (Arlington Capital Advisors)
And maybe that's because chocolate tends to have maybe less flavors available and gummies tend to have more flavors that you can do.
7:31 - Mark Cozzi (The Bettering Company)
So yeah, sorry, I was referencing flavor.
7:35 - Dai Truong (Arlington Capital Advisors)
Yeah, yeah, sorry. I did say SKUs. That's my fault.
7:36 - Mark Cozzi (The Bettering Company)
Yeah, I mean, gummies, we think exactly. There are so many different gummy flavors that are possible and we are trying to innovate, right, with these, what we think are some unique flavors. So with chocolates, we're very much set on dark chocolate and oatmeal chocolate. And frankly, there's a bit of testing here to see what consumers like. And the chocolate market is smaller, of course, than the gummy market. And so, as you know, as we launch our products, we're testing and learning.
7:24 - Dai Truong (Arlington Capital Advisors)
That makes sense. Now, I want to go back to sort of the origin story for the company. So, you know, starting in January 2017, we're recording this now towards the end of January. So almost seven years to the date. Other folks would kind of go out the gate if they're very excited about an idea, you know, spending time money, get in market ASAP, see what happens. You guys have seemed to have taken a more methodical, slower approach. So walk us through that thinking.
7:52 - Mark Cozzi (The Bettering Company)
Yeah, I've never done anything quickly for better, for worse. And the idea here is. is that this is very much a marathon and not a sprint. And I have a long-term view. I have outside investors as of a couple of years ago. They have a long-term view. And so the view is, let's get this right in Illinois and then let's expand methodically to different states after we've gotten it right here. And we're doing everything institutional quality. So we have, let's say, three years or five years from now or whatever, a company like Kraft or Mondalees or PNG or Kelloggs whomever wants to buy us, if we're so lucky, that we will have all of the processes and controls and SOPs in place that they would respect and want.
9:58 - Dai Truong (Arlington Capital Advisors)
That makes sense. Do you feel that's put you at a disadvantage in any way to go a bit slower into certain markets and you're actually launching a market that's dominated by MSOs, that sort of swap space so to speak at the retail shelf? I imagine that's a part of the difficulty as well launching in Illinois and trying to win market share in Illinois.
10:22 - Mark Cozzi (The Bettering Company)
So help us understand that. Yeah, for sure. It's more expensive to do what we're doing and in some ways it has allowed the Illinois market to mature but in other ways there are so many new dispensaries that have come online in Illinois that are timing is almost perfect and we're getting really, really who frankly some of them don't want to. give business to some of the MSOs and don't want to have terms dictated to them, which some MSOs may or may not do. And so, yeah, it's a little bit harder. You know, I wish we had been in the market earlier, but I don't know what we could have done differently to get into the market earlier. We received our license in the summer of 2021, and it took us about two years to enter the market. We built out a commercial kitchen in Rockford, Illinois, which is state of the art, and that took time and money. And so, yeah, it has taken time.
11:44 - Dai Truong (Arlington Capital Advisors)
Yeah, and I think that's a good highlight that you mentioned when these Illinois social strike rate licenses across the supply chain are rolling out. You are then entering the market from a wholesale standpoint, and it makes sense because they'd rather carry an independent product than one. carried by an MSO that's producing manufacturers from them because that's directly their competitor at the retail level.
12:06 - Mark Cozzi (The Bettering Company)
Yeah, we have we've already it's so interesting and it's exciting and it's fun and encouraging to develop really strong relationships as new dispensaries, online, who are you know, mom and pop independently owned, we're independently owned, and to partner together and figure out what they would like us to do and how we can help them and vice versa. And we already have some dispensaries that have become amazing partners and and hopefully they feel the same way about us.
12:41 - Dai Truong (Arlington Capital Advisors)
And go back to what you mentioned, what else could you guys have done differently? mean, not to then scrap your plans, the only thing I could think of is then say, hey, it's taking a bit longer for us to get up and running in Illinois, the competition's increasing, maybe we go to a different state where licensing may be easier, maybe that's a Missouri or whatever else. I'm sure that's a part of the consideration. Help us understand, know, why did you go and pursue a different market and just kind of, you know, held down before it and kept going strong with Illinois?
13:12 - Mark Cozzi (The Bettering Company)
Yeah, for sure. We had some discussions about Oklahoma. We had some discussions about Michigan, where the barriers to entry are conceivably lower. We think those markets are messy. And there's a lot of price competition. And we'd rather compete in a really difficult, complicated, organized market than a messy market. And so, and so really, epitome of messy, but it's slow messy. Or the barriers to entry are quite high. New Jersey is really our next target. And we've started to have discussions, excuse me, started to have discussions with potential partners in New Jersey. And it's one of my personal goals for the next two or three months.
14:26 - Dai Truong (Arlington Capital Advisors)
Yeah, New Jersey has that secondary market over anything else?
14:31 - Mark Cozzi (The Bettering Company)
Because it's nascent and there aren't a lot of great brands. In New Jersey, I was just out there for about six weeks or so. And I visited a bunch of dispensaries. The customer experience is pretty terrible. The product offering is not particularly interesting. And so, that market is so new. And so there we want to get into as soon as possible, plus considering we've now set our recipe formulation or packaging, all of those, you know, website, social media, all those things are in place, so we can now move much more quickly. In New Jersey or any other state.
15:24 - Dai Truong (Arlington Capital Advisors)
As a part of that licensing structure where you're looking for a partner instead of telling way where you have your license, building out your own infrastructure. What are some sort of incentives for partners in choosing the very company versus your competitors, a key bar or a groom or, you know, any of the other edibles competitors.
15:42 - Mark Cozzi (The Bettering Company)
Yeah, I mean, I hope it's in, we have been approached by two edibles companies to have us copack their products in a rockford facility. And both are really outstanding companies. Good partners, fair economic terms to both parties, solid financial backing. Those are really important to us, scrupulous people, scrupulous partners. And so in New Jersey, hopefully a potential partner will feel the same way about us. And certainly the companies that you mentioned are scrupulous and successful. And there's a lot of room for a lot of different brands in the market.
16:35 - Dai Truong (Arlington Capital Advisors)
Yeah, it's interesting for me to see, you know, think you guys are around 45 stores today in Illinois. But a brand, you know, maybe from a distribution standpoint as young as yours. So then think about the next state already. And I think, you know, that's probably because of the funding and the way you thought about this business for the last seven years. So with that, we would love to kind of, you know, track that funding timeline. So how long was it self-funded for? When did you start going out to institutional investors? You guys announced a larger race last year. What's the reception? Why did they invest? Help us understand that?
17:12 - Mark Cozzi (The Bettering Company)
Yeah, I self-funded up until about five years ago and about four and a half years ago. I guess about the time that we got our license in Illinois, a number of my friends had heard the story for better or worse for a very long time. And when we finally got our license, they said, look, if you go out to raise outside capital, we'd love to talk. startup, CPG companies, restaurants, ancillary technologies. And I sent him the deck and he said, look, I get it. This is great. How can I help? And so he introduced us to a few different folks, including Peter Ray Hall, co-founder of RXBar, and Peter understood the story, got the story, and offered to help out as well. And so they were early helpful supporters and then other friends of mine who had heard the story for a very long time were receptive. And so we ended up raising $5 million of capital in the spring of 2022. And then, and that was an equity round into the veteran company. And then we did a follow on offering in about a year later, last year in the spring. And then we did a separate transaction involving our production facility where we set up a partnership to buy and fund and finance that facility with a group of investors, some of whom are also invested in the bettering company, others who are not. And so altogether, we've raised over $11 million.
19:30 - Dai Truong (Arlington Capital Advisors)
And were the terms similar from that 2022 to 2023 raise?
19:35 - Mark Cozzi (The Bettering Company)
Yeah, very similar. And there, the overlap in investors was very high. Wasn't a complete overlap, but it was very similar.
19:45 - Dai Truong (Arlington Capital Advisors)
Yeah, no, I think that's one of the strengths of the company to have your background in finance and the network you have to be able to raise that capital. Again, when that announcement came out in the fall, when you finally got ready to publicly announce. Now it's it. I think a lot of people hadn't heard about the company, but we're surprised to see that amount of ways, especially for an edibles concept. I think that certainly checks the box on sort of what I think about the company that's a position of strength. And I think the investors continue to invest and have that overlap between the two years. That's a big message for you guys going to check in the box on hitting the milestone.
20:28 - Mark Cozzi (The Bettering Company)
Also, I'm sure that you communicated.
20:31 - Dai Truong (Arlington Capital Advisors)
I think the other, you know, it's funny. You mentioned and I'm glad you brought up the arts bar connection. I look at your packaging and their packaging. Pretty similar in terms of the colors and the look and feel. So how active is Peter in the company? Or is it like the introductions that he's made and you guys are using similar branding and design agency? So, you know, help us understand the look and feel of the brand.
21:00 - Mark Cozzi (The Bettering Company)
For sure, one of the first questions that he asked my co-founder, Drake Nickel, and me was, you know, how can he help? And we said we'd really love to help with packaging and naming and brand strategy. And he suggested that we speak with a boutique firm in Chicago that he had worked with to develop RXBAR packaging and so on. And we did. And so they helped design our packaging, sort of gummy packaging, which I have one here. You know, it's clean and simple and the idea is all the colors for the six SKUs are complementary colors and that like in RXBAR end cap, if you see it from across a dispensary or a grocery store, it catches your eye and you hopefully go and, you know, want to check it out. And then our chocolate boxes have also launched and have also launched. And there again, the packaging is quite unique. And for the chocolates, we have them arrayed in a slide out tray. And there are 20 pieces individually wrapped that will be stacked on their sides. So something that just doesn't exist in the cannabis sector.
22:31 - Dai Truong (Arlington Capital Advisors)
Yeah, that's very thoughtful. mean, I didn't put it together until you mentioned that the six packaging you have for your gummies, all those colors actually met to sort of sit on a shelf. they're all meant to look that way versus I thought was just six colors you might just like.
22:48 - Mark Cozzi (The Bettering Company)
Mm-hmm. Yeah. And we're actually doing R&D for six new flavors for gummies. And we'll also have six new colors and we're using there's a specific person whom we use to pick the colors and that person is standing by to pick the six new colors so they're a complimentary as well.
23:13 - Dai Truong (Arlington Capital Advisors)
Yeah, I'd love to see the photo of the end caps and how they look in a dispensary. Please certainly do share that.
23:20 - Mark Cozzi (The Bettering Company)
Sure.
23:22 - Dai Truong (Arlington Capital Advisors)
And going one more thing on the packaging, I think are all the ingredients on the back of it.
23:27 - Mark Cozzi (The Bettering Company)
see in the website, you know, it's a description but are all the clean, simple ingredients also in the back of that packaging? Yes, they are. And for instance, dark chocolate truly has minimal ingredients. Everything is organic and fair trade except for the distillate. Vegan, fair trade and organic.
23:52 - Dai Truong (Arlington Capital Advisors)
And just because I don't really look at the ingredients for your competitors. I assume this is not necessarily the case. Are there fillers or other ingredients that they use that may not be of similar quality? Can you help us understand that?
24:09 - Mark Cozzi (The Bettering Company)
Yeah, I don't want to make a broad generalization because there's so many different brands out there.
24:13 - Dai Truong (Arlington Capital Advisors)
I'm obviously just trying to get to top 5 competitors.
24:18 - Mark Cozzi (The Bettering Company)
Yeah, many, many gummies have artificial coloring or coloring, it could be a natural coloring, to create a certain look. Our gummies have no additive coloring. So, if you look at our watermelon chili, what you see is the color that occurs, that's a result of how we make them. In our watermelon chili gummies, for instance, the chili is tajín. So, you can see the flexive tajín in our watermelon and chili gummies, we don't try to hide them. And they're like blueberry muffins, right? You can either see the blueberries or not, depending on, you know, and so. So yeah, other gummies, other chocolates, you know, many chocolates are made with a compound chocolate, which is a highly processed chocolate, and then a lot of the chocolate addables have a lot of added ingredients and flavorings and so on, and we're just simply not gonna do that.
25:39 - Dai Truong (Arlington Capital Advisors)
Yeah, I see you have the ingredients on the website as well, curious that thinking on, know, I was gonna assume if I sort of hovered over, like in through the packaging and the individually wrapped photo, I'd kind of see inside the gummies. So what's the thought of not allowing them on the website today?
25:58 - Mark Cozzi (The Bettering Company)
You know, it's interesting. I didn't. realize that. Rashi doing product renderings in photography, we're about to launch CBD and CBN only gummies that will be sold outside of dispensaries. And that photography does have the package, a piece that's wrapped and a piece that's unwrapped. And so...
26:26 - Dai Truong (Arlington Capital Advisors)
I'm going to assume it should be here on the website.
26:29 - Mark Cozzi (The Bettering Company)
So I guess less updates. Yes. So maybe the team has gotten better already in photography.
32:36 - Dai Truong (Arlington Capital Advisors)
And I'm glad you brought up that you're launching a product that's going to be going to more of that traditional channel. Help us understand sort of then, let's say in a year or two, how does the revenue mix look for the ones that are going into cannabis and the ones that choose to kind of do both at the same time? Yeah, I've seen... that time and time again, companies do that and sort of fail by trying to dole path and then have chosen them to just pick one channel to pursue.
27:10 - Mark Cozzi (The Bettering Company)
Yeah, again, we're so measured and so not quick. So we're launching this month in two retail channels, Bricks & Mortar channels here in Chicago, higher end, higher highly curated products and then we're also launching on a direct to consumer quick delivery platform. so those are the three channels that we'll be selling through here in a couple of weeks, two or three weeks. And the idea is there is demand. Some of our competitors are in two of the three channels and their products are fine. We think our products are better. These channels think that they're better and are excited to carry our products and we're willing to promote them and support the launch of our brand in all three distribution channels, all three retail channels. Hopefully, we think the ROI on doing this will be quite strong because we can make these in our existing facility. Same recipe is just different. CBD, CBN, THC. Two of our THC products, one of our THC products, excuse, has CBD. In addition to THC, and one has CBN, in addition to THC. See, so we're familiar with adding these ingredients to begin with. And so it's not a, it's not a heavy lift for us. And we think it'll be highly complimentary that someone sees our products in one of these three channels and then it creates brand awareness that can carry over into a dispensary or vice versa.
29:22 - Dai Truong (Arlington Capital Advisors)
And do you expect that channel, call it the non-cannabis channel to generate more revenue in, let's say two years, or is it going to be pretty even?
29:32 - Mark Cozzi (The Bettering Company)
It's impossible to say. I'm not smart enough to figure that out.
29:39 - Dai Truong (Arlington Capital Advisors)
You're a long time finance guy.
29:40 - Mark Cozzi (The Bettering Company)
I'm sure you can watch those out. In 2024, the non-THC sales will be lower. I think in 2025, they might be equal. And beyond that, I really can't say. Really hard to say.
29:59 - Dai Truong (Arlington Capital Advisors)
Yeah, no. I was more so asking that question for sort of where the focus may be. So the fact that you said they may be at parity and at 25 is helpful in thinking where priorities may lie. I guess that leads me to another question on team composition because, you know, how big the company is today from an employee standpoint, where most of its employees run because I assume that the person you hire for the traditional retail channel is going to be different from the person for the dispensary sales channel.
30:30 - Mark Cozzi (The Bettering Company)
For sure. We have eight full-time salaried employees in Chicago where we're headquartered and then we have a total of 12 people in Rockford.
30:47 - Dai Truong (Arlington Capital Advisors)
And are they all focused on both sides of the business?
30:51 - Mark Cozzi (The Bettering Company)
Yes. In Rockford and Chicago, we have a couple of salespeople. The sales and marketing people are dedicated just to the THC business and to the CBD business that's really being driven by Drake Drake Nickell co-founder and me and our relationships with the three retail channels.
31:18 - Dai Truong (Arlington Capital Advisors)
And you know e-commerce is going to be a big part of that CBD CBN channel.
31:23 - Mark Cozzi (The Bettering Company)
We're exploring that right now. We're in advanced discussions on how to do that. There again we'd rather take our time and do it right and really that's a complicated business and you can waste a lot of money running a meta campaign and trying to drive traffic to a Shopify page. And so we are analyzing it quite extensively.
31:57 - Dai Truong (Arlington Capital Advisors)
And I know we covered this before but just for the audience. So no interest, even though there's a lot of noise around the Delta 9 Hemp channel, correct?
32:06 - Mark Cozzi (The Bettering Company)
We keep getting asked if we would do it and will do it. And I'm becoming more open-minded to it. But you know, the risk is that Delta 8, Delta 9, and whatever form becomes illegal federally, right? And so I don't know. I don't have a clear view on that. I were thinking about it. so we've made no decision.
32:43 - Dai Truong (Arlington Capital Advisors)
Yeah, it sounds like it's protecting the business, core business, and is the upside of the near-term immediate gains worth the risk to that potential M&A exit down the line that you mentioned at the beginning of this podcast. So, you know, since we've kind of covered a good amount from the early days and sort of how you've been developing the business and sort of being very thoughtful about it, you know, in this industry, we've all kind of missed the mark on sort of timing and, you know, some assumptions we've made. So what have been sort of the challenges for the business that you predict and, you know, how they impacted the business, how did you go about course correcting?
33:31 - Mark Cozzi (The Bettering Company)
For sure, it is raising consumer awareness, creating brand awareness and encouraging consumer trial. We vastly underestimated the challenges, both of those. And now we're working in, or maniacally focused on those two things. right, and so we reached our goal. We thought, Fantastic, we're in 45 dispensaries at the end of last year, but the sales were much lower than anticipated. now because we're pulling all the levers of promotion and discounts and online marketing and so on, so now we're seeing the sell-through, now we're seeing the reorders, but we really miss the mark on that.
34:30 - Dai Truong (Arlington Capital Advisors)
Right, so you targeted a key metric in the number of dispensaries to be in, but once you're in it's about actually getting the velocity in those products, the new purchase. What are some attempts to sort of course correct that going forward? You kind of mentioned sampling, sort of just getting promotional offers to customers to just get them to try it and then just believing the product quality is there for repeat purchases and maybe even...
35:00 - Mark Cozzi (The Bettering Company)
Game the consumer swap of allegiance is from whatever they may be buying today to your product for sure and You know one aspect that we didn't really focus enough time on was let's say in Excuse me in Illinois 50% of Dispensaries revenues occur when a consumer places in order online and Then goes to a dispensary to pick up his or her or their order Well, we were not focused on that up until About two weeks ago three weeks ago, and so now we're focused on okay when you click on XYZ dispensary Website and you go to buy we should be Have we should have some sort of banner ad or better placement in the menu towards the top of the menu So that when somebody clicks on edibles there we are and so there are ways to do that Same thing in dispensaries we think. So let's say 50% of sales occur online store pickup, then another 25% occur when someone enters the dispensary and that person knows what they want to buy. And they go to a kiosk to place their order to punch in their order. Same thing. They click on edibles. There should be a banner ad or a better placement for our products for that 25%. And then if the other 25% speak with a budtender to place their order, well, the bud tender should be armed and ready to know about our products. And they are, and when they learn, they're generally enthusiastic, not everyone for sure. But it's telling the story and shaking hands and kissing babies like in a retail policy. And so that just takes time.
37:04 - Dai Truong (Arlington Capital Advisors)
You know, some of that sort of just swag for the blood tenders. It's budtender appreciation events. It's sort of making sure they have an affinity for your brand over, you know, others in the category. Is that some of what you guys are attempting to do at the moment?
37:19 - Mark Cozzi (The Bettering Company)
Yeah, absolutely. I visited a dispensary last week and I brought donuts and I brought swag and everyone was engaged in the story. Some people had heard it. Some people hadn't and we'd been having difficulty up to that point, scheduling pop ups, scheduling butt tender training. And the next day we got an email saying, all right, let's come on in. Let's do all of that. And so was it because I was there with donuts? I have no idea, but hopefully they aren't good and it didn't hurt that I was there.
37:52 - Dai Truong (Arlington Capital Advisors)
Yeah. And that, you know, it's been conflicting from earlier when we kind of mentioned these independent social equity stores. That are, let's just call it non-MSO stores, who are more inclined to bring independent products into the store. So is that because there are other independent choices for consumers in the Illinois market, or sort of, you know, why do you have to do more work than just sort of having it as an alternative to MSO brands?
38:20 - Mark Cozzi (The Bettering Company)
Yeah, I think it's, well, I think one thing is that turnovers are very high in dispensaries, and I'm hearing this over and over again. And so I think there's staff shortages, and I think some of the managers are overwhelmed. I went and visited a different dispensary two weeks ago, and we were having a hard time reaching the manager, and we just rolled into the store. And then he spent an hour and a half with us, and he said, look, I'm really, really sorry. My turnover is way too high. and I don't have an assistant GM. And so we're battling a little bit of that, which I totally empathize with.
39:10 - Dai Truong (Arlington Capital Advisors)
Yeah, no, but time to turn over is pretty free when in some cities and some states. It's almost like every three or months, you know, going to the portion that will turn over.
39:23 - Mark Cozzi (The Bettering Company)
Yeah, I mean, what the manager said was he said, you know, dude, you can come and give a butt tender training, but you may have to come back in three or four weeks and do it again. And that was sobering for us to hear.
39:39 - Dai Truong (Arlington Capital Advisors)
All right, you guys are leveraging some sort of LMS solution. So it's maybe recorded and again, I think the in person helps because even if you have a video library of training that some new butt tender can do, probably not doing it unless there's some incentive.
39:54 - Mark Cozzi (The Bettering Company)
Are you guys leveraging any of that to kind of just make that a bit more efficient? We are We are doing that and I don't know how effective it is but we are doing it and some buttoners will say hey I saw your Your training that was really great and then we have some buttoners like I've never saw it Yeah for my experience kind of just in person you get you know all the decision-makers in a room especially I guess that this is probably different than my experience at MedMed but you know some products some brands coming to MedMed You would just bring all the decision-makers plus all the called store managers region man regional managers into the room Usually that helps kind of you know Deploy the messaging from top down and then you can kind of if there's some incentives like hey whoever sells the top amount This brand this month wins hundred bucks in Amazon gift card usually those provided some incentives for people to push products So we literally signed up today to do that Thanks, okay, we're doing that in either three or five dispensers trees. We literally signed the contract today.
41:03 - Dai Truong (Arlington Capital Advisors)
Nice. That's great. A short term and then longer term, you guys will hope that you convert those bud tenders into just fans without minimizing them voluntarily or otherwise. So can you can you share with us any sort of financial metrics or KPIs that are our goals for you to close out 2024 with, you know, given that I know 12 months out or he gets 11, but just, you know, where are you guys trying to be at the end of the year?
41:34 - Mark Cozzi (The Bettering Company)
What are you trying to accomplish this year? Yeah, for sure. Our goal is to have $500,000 in revenues in December, so ramping up from where we are today to there. And when we look at other edibles brands in Illinois, that puts us in kind of like the top 15. It might be 50. team. And so we think that's achievable. And that is our key goal. And then the other key goal is to enter New Jersey. I don't know if we can have sales by the end of the year in New Jersey, but we will be on our way with the partner getting a production set in New Jersey, hiring a couple of salespeople and so on. So those are two, I know that's not a KPI necessarily, but that is something that's a key goal of ours.
42:39 - Dai Truong (Arlington Capital Advisors)
Yeah, things that are trackable, right? So if we're speaking to catch up this time next year, who directed the year at a six million run rate, did you enter New Jersey? And then that sort of will help with, hey, how close are you to New York? And now what's your fourth state that you're thinking about? no, helpful. On top of that, give us that raising capital is very topical in this industry. How does that balance out with burn for the company? Are investors on board to fund the next 12, 14 months, or do you have to go back to market? you do go back to the market, what's the timing on that?
43:19 - Mark Cozzi (The Bettering Company)
Yes. We are speaking with our league investors here over the next few days, and we are going to launch a capital raise, and we think that existing investors will step up again, and we think there are some really great new investors who have approached us, and we've approached them over the last few months or so. I think it'll end up being a combination, and the goal is to close that in the next 60 days, 75 days, and looking to raise two to three months. million dollars.
44:01 - Dai Truong (Arlington Capital Advisors)
Okay, so it sounds like these investors are interested in the brand. Are they currently a Cannabis investors or are they more interested based on your cap table, based on sort of how you're building this company that's going to be more CPG like from the start?
44:15 - Mark Cozzi (The Bettering Company)
Yeah, I would see very few are seasoned investors in the cannabis sector, absolutely interested in this from a CPG standpoint, people that know me and referrals, right? So we existing investors, hey, talk to Mark, he's raising money and so I'm trying to think, we have a few people with whom we will speak who are existing kind of big cannabis investors, but they're not necessarily a priority for us. They're certainly welcome, but not a priority.
44:55 - Dai Truong (Arlington Capital Advisors)
Yeah, I imagine just getting where the company is and sort of what's been raised. That's probably going to be a non-Canvas multiple that folks are signing up for.
45:05 - Mark Cozzi (The Bettering Company)
Yeah.
45:07 - Dai Truong (Arlington Capital Advisors)
Yeah, I know that's always sort of what you have to balance. Getting sort of those strategic investors from a Canvas standpoint because there's potential introductions into future states, partners, but then also knowing that the comp base that they're using is very different. the comp set has very depressed multiples today. Even though it's improving from all time highs, all time lows rather.
45:32 - Mark Cozzi (The Bettering Company)
Yeah, for sure.
45:34 - Dai Truong (Arlington Capital Advisors)
I know it's hard to kind of project out on that fourth state because when you reach New Jersey and New York, so much could change. it gives an idea of what states you're paying attention to or what sort of regulatory changes. My assumption is Florida is probably one where because about measure later this year, if it goes, don't use it, you kind of can't. I think your lead investor has a home down there and spends time down there. It does. It just helps us understand, you know, things might change towards the end of the year. Where are you really paying attention for that fourth state?
46:12 - Mark Cozzi (The Bettering Company)
Florida, for sure. I'm going to be in Florida next week meeting with investors and folks who are very close to what's going on in the state. And then Ohio. I have a lot of connections to Ohio where friends can be quite helpful. And so, you know, I don't know, maybe Ohio supersedes New York in terms of where we go after New Jersey. New Jersey, for sure, will be next. And so we're watching Ohio. But those are the most interesting states for sure after New York and New Jersey are Florida and Ohio. The brand from Michigan that wants to enter Illinois that may co-pack with us has spoken with us about entry. Michigan via their infrastructure, those are pretty nascent conversations at this point.
47:09 - Dai Truong (Arlington Capital Advisors)
Yeah, so it sounds like from a state perspective, what gets interesting is it's a nascent market that's still developing where you can find the right partners, where consumers haven't really locked in on a certain end of just, yeah.
47:26 - Mark Cozzi (The Bettering Company)
Yeah, for sure. I mean, Georgia, who knows what happens in Georgia, longer term, I think Texas is pretty fascinating, still quite red, but turning less red from a political standpoint. So we'll see when legalization might occur there. I don't think it'll happen next year or this year, but at some point.