There were probably plenty of cannabis investors glad to see the end of 2019, a year when the legal marijuana industry broadly hit the reset button. To many companies, survival served as a testament to good health. If you’re Sturges Karban, CEO of ManifestSeven, 2019 was a solid year for growth, and exciting times lie ahead.
Speaking with CFN Media’s Laura Albers at MJ Biz Con in Las Vegas, Karban explained that the industry pullback is healthy as it shakes out some of the weaker companies. “This is where the real sustainable build for the industry is going to begin,” said Karban.
Privately-held ManifestSeven, or M7 for short, is planning to become a public entity, but has taken its time with making the move against the backdrop of the market volatility. According to Karban, listing day is approaching as the tumultuous year for the industry didn’t slow his company from experiencing dramatic growth.
To the downfall of many companies in the cannabis space, management spread resources too thin by employing a business model that was too diverse, generally thinking vertical integration was a key to success. When the capital pool started drying up, these companies struggled to meet expectations.
Not ManifestSeven. From inception, the company’s plan has been to differentiate by first focusing on dominating one specific part of the industry: the supply chain in California. That’s a plenty tall order as California is the world’s largest legal cannabis market with sales forecast to have topped $3.1 billion in 2019.
More succinctly, ManifestSeven is building the most comprehensive distribution and retail platform across the state. The platform is designed to fully support the B2B side of wholesale distribution as well as every retail channel in which a consumer can purchase a cannabis product. To that end, M7 does it all across its cannabis superhighway, supporting sales at dispensaries, e-commerce sites, on-demand delivery, in-store pickup and monthly subscriptions.
There is more to consider here than just shuttling marijuana products around. The California market is highly fragmented with conflicting ordinances across nearly 500 municipalities. M7 provides the infrastructure, data and analytics to keep companies compliant and supplies consistent.
The company owns and operates dispensaries under the Weden moniker and already works with 335+ dispensaries and thousands of ancillary B2B clients. To remain compliant itself, M7 holds 64 licenses in 11 major California markets.
M7 makes all of its services available through a singular platform accessible at 1-800-CANNABIS. Karban quipped that even an average pot user can remember that number.
A Big 2020 On Tap
Karban is clearly optimistic about the new year and direction of his company. He has assembled a world-class team, including the recent addition of former Xerox executive Hélène Blanchette as the new president of its female-facing MyJane subsidiary. Blanchette’s credentials are impressive, having served as global vice president of marketing for Xerox’s production business, and during her decade-plus in senior leadership, helped found the internationally recognized Xerox 1:1 lab, crafting personalized, data-driven direct mail campaigns. With additions like these and a defined path to profitability Karban sees his company as opportunistic as to when it decides to execute a go-public transaction.
Documentation is already on file with the Canadian Securities Exchange for the public offering.
Investors will be watching for the company to become cash flow positive in 2020, an elusive target for the vast majority of cannabis companies, which Karban says should happen in the first half of the year. This move towards profitability has been underscored by revenues rising from about $5 million per annum to about $70 million.
M7’s platform will cover almost 90% of California’s population, or more than 35 million people, with six new delivery markets coming online this year. Four planned cannabis dispensary acquisitions will continue to widen the Weden retail footprint too.
ManifestSeven may have stated its first goal was dominance of the California market with its integrated B2B and B2C omnichannel platform, but that’s a jumping off point, not an end game. With most of California covered, the company is now starting to move into new markets in 2020, beginning with its operations in Arizona and Illinois.
With at least 16 states expected to have votes on marijuana legalization later this year, opportunities abound as to where M7 is heading next.