Daniel Abrahami is the cofounder and CEO of Headquarters (HQ), a newly formed strategic advisory studio which launched a revolutionary approach and suite of services to help cannabis entrepreneurs enter, build, scale, and unlock accelerated growth in California’s multibillion-dollar market. HQ also unveiled its “HQ California Launchpad,” a new, proprietary six-month growth program, which culminates in a 30- to 60-day in-store pilot program, to take businesses and emerging brands from idea to products-on-the-shelf in six-months. 

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AUTHOR: Heather Allman

PUBLISHER: CANNABIS LAW REPORT 

Creating Cannabis Companies with Daniel Abrahami, CEO of HQ California Launchpad  

 

Daniel Abrahami is the cofounder and CEO of Headquarters (HQ), a newly formed strategic advisory studio which launched a revolutionary approach and suite of services to help cannabis entrepreneurs enter, build, scale, and unlock accelerated growth in California’s multibillion-dollar market. HQ also unveiled its “HQ California Launchpad,” a new, proprietary six-month growth program, which culminates in a 30- to 60-day in-store pilot program, to take businesses and emerging brands from idea to products-on-the-shelf in six-months. 

Additionally, Daniel is Managing Partner of AGM Ventures and has been advising companies and investing in cannabis operations since 2014. With a passion for the intersection of cannabis and commerce, his mission is to unlock innovation in the industry.

Daniel led business development for ABC Gems, an international emerald mining, cutting and distribution company. He also co-founded Pravo, the first decentralized high-end jewelry manufacturing operation in Los Angeles, and helped launch numerous direct-to-consumer fashion and apparel companies.

Why? What’s the appeal? Where’s it all headed? Why invest time, effort, and money in the current market, especially in the embattled state of California? Let’s talk to an expert.

On October 26, 2020, I talked with Daniel Abrahami about the process of helping new cannabis brands enter the market in today’s U.S. business climate, about maintaining credibility, and much more. 

Daniel Abrahami (center)

 

Cannabis Law Report: I know you’ve been quoted as saying “Being first is not always best.” Do you personally have a life motto, mantra, or favorite quote that you like to use to keep yourself going.

 

Daniel Abrahami: I’m not one to live by, by others quotes or mottos. But something that I’ve constantly found myself falling into is that I just want to work with people I get along with, and that has kind of been more of, like a last two year thing that I’ve been kind of living by, that if I don’t click with the person or the idea or the business or whatever it may be that I’m encountering… if it doesn’t fit my values, it’s not worth the headache of pursuing so I just want to work with good people, which would, I guess, be my mantra in the last few years. 

 

CLR: And I think that’s a nice way to put it, because it is difficult when you don’t have a team around you that you feel you all get along and can share and learn and grow from each other.

 

DA: Exactly. You know, I think coming from the cannabis that you’re coming from, previously the diamond industry —where my family has long been involved in— and then being involved in cannabis for six years, you know, this is definitely a business of deciphering who is going to pull the rug from under you and who’s not going to. And so, lately, I’ve turned down a lot of opportunities just because it’s not clear that there’s a fit. And you know, I may lose some, but in the end, I’ll be happier. 

 

I think that that’s a good way, a good way to approach business, especially in this climate, because it means that so many things are already uncertain that when we get into business, those that we’re not totally comfortable with, you know, that changes the whole scheme of things.

 

CLR: Please explain HQ Launchpad to me, in your own words.

 

DA: I’ll give you the backstory on it. A lot of a lot of what we do is derived from this, and it’s really just been, I’ve been unofficially involved in cannabis for six years, where I’ve helped friends navigate the kind of prelegal market, the gray market, if you will. I’ve seen kind of the barriers to entry in that market. When legalization happened. We saw how high the barrier to entry became with regulations licensing, you know, and we really felt like, okay, California is the golden opportunity for a lot of these cannabis brands.

It is the mecca of brands in general, outside of cannabis as well. But how can we fulfill the promise of the cannabis industry that everybody was talking about when Canada went legal? And, and everything was happening? How can we fulfill that promise, we have these high barriers to entry where innovation doesn’t have a clear path of entry. So, you know, I saw how my network was kind of still in control of the market. Right? So it’s a lot of the, like, the Oh, geez, you know, never been able to make that transition.

And, you know, they they’re involved in cultivation, they’re involved in the manufacturing, and they don’t like, change, right, the status quo is good for them. And so, you know, bringing a new product to them, where it doesn’t have that popularity, you know, where flowers not vape and it’s not only about enjoyment, right.

It’s something that’s new requires education, it’s more medicinal and wellness, you know, those type of products have a hard time reaching the market. And so we we actually started looking at what was happening in Israel, for since 2016 to 2018, I spent two years just going around everywhere in Israel, looking at meeting all those professors, meeting all the companies that were doing very interesting stuff on the pharmaceutical side, and I said, this needs to be in California.

You know, they’re 40 to 50 years of medical data that they’ve been collecting. They understand really, on the medicinal side, how cannabis can help. And there were these labs and these companies that were doing really amazing work on trying to solve specific indications using cannabis. But when I, when I would talk to them, I would say, you know, you didn’t want to be in California, what’s the path and they say, we want to be in California, we don’t know how to be in California.

So the launch pad really came about building a bridge between, you know, innovation in California, with a focus on on on Israel at first. And that’s why kind of our model and headquarters is like we want to unlock innovation. Because without the foundation to do that, in California, those products will be coming into the market. 

CLR: Right. And I think that that’s good. I mean, as far as your Baxter, I mean, tells me a lot about what your goal is now is to help these companies that don’t have that clear path from the innovative product, whether it’s a beverage or I know what you’re saying as far as new delivery method to market. And so that’s what you guys do is take this ideas that they have their lab and research and you bring it all the way to shelf is that correct?

 

DA: Yeah, yeah. So we kind of call it idea to product on the shelf in six months. That’s the goal of the launch pad and it’s really to create that proof of concept. Creating feedback loops as quickly as possible. Because, you know, we went through the licensing process in California, it took us about a year and a half and a million bucks to do that, you know, most companies will not be able to wait a year and a half and spend 1 million bucks before even knowing if there’s a fit for them in the market. 

So, you know, that’s where we saw the issue of the barriers entry. And then, you know, we can go into the regulation, but now those are barriers to entry. But we, we saw this scenario where we’re not going to reach the full potential that everyone’s talking about in candidate unless we actually have an environment that these companies can thrive in.

And consumers can actually be aware of these products in the market and understand that cannabis isn’t just but it’s not just joined. But it’s much more than that. 

CLR: Right. And, and I think that, you know, having that idea, that idea to product shelves in six months, that I’m sure holds a lot of appeal for these companies who are having these barriers.

DA: Yes, and you know, and especially one of the companies that we’re engaged with right now, there may have a zero presence in California, they just, you know, they need the help help navigating, understand, I mean, talk about working with people that you want to work with and trust, it’s hard to find, you know, a supply chain, that you can rely on individuals that you can rely on in industry, if you’re brand new coming in, you know, there’s a lot of stories that we hear constantly of companies, there’s getting a rug pulled out from under them, you know, supply chain breaking down, and the brand never coming back into market with it. 

And so, you know, it’s really about creating an environment to do that. And, you know, we look at this in every industry, you know, technology, now, you had the boom of technology in the 90s, many of the crash, but what happened was, those companies, they really set up the foundation for what 2008 and 2010, when the, you know, when all these types of companies came into the market, he set the foundation for them, they created the environment, lighting, the fiber optic cables, all of that, in order for them to thrive 10 years later.

So we want to do the same in cannabis right now. And that allows these companies to get into market, navigate the market, and then, you know, growing from there and go out of California. And that leads a little bit into my next question, which you did answer somewhat there.

 

CLR:  But talking about that delicate balance that you have to maintain between being people-centric and profit-centric, because that sounds like that’s a lot of the navigation that you probably you probably do internally, I would imagine is, is balancing, as you said that there are these products that could really help people and to get them to market to where that company can then become somewhat profitable. That’s a difficult balance. How do how do you guys go about reconciling the two? Because I know they’re not mutually exclusive by any means.

DA: Yeah, I mean, I would say, you know, the first, when when the first idea of headquarters came about, you probably spent about a year finding the people that we want to be involved in headquarter. And so you know, we definitely took that people first approach, right, we wanted to have internally, our team, our partners, to really buy into the vision to have a shared vision for what cannabis looks like. But it’s all about balancing. The other side of it is where we have to be a business, right, you have to make money to continue. 

And you know, I’m a capitalist, by all means. And so I think that’s kind of the incentive there. And for brands, I mean, you know, for them to get into the market, what we want, where we kind of preach is okay, you have the right team to do this, you know, we want to compliment your team and help support that.

But it’s really in the beginning, it’s it, it’s about staying as lean as possible. Because going through the process and working through supply chains and all that can be costly and it shrinks your margins. But the whole point is to understand where you belong in the market and survive these waves that are better constantly coming into the market.

Provide the up and downs where it’s thinking long term, not short term where I think majority of the mistakes happening right now in cannabis have been short term thinking. And we’ve seen it time and time again, within Canada with all these companies in the market. 

 

CLR: Yes, because when you look at companies like MedMen —the people that have the capital, but don’t quite know what to do with it— aren’t quite, you know, you’re not reaching the people part, you’re just reaching like you’re not making the profits either. So I understand I mean, and the way you answer that was was perfect because you have to be a capitalistic business, you’re a business. But that doesn’t mean that you have to take the person and the people you’re trying to get the product to out of the picture.

DA: Completely. And when it comes to helping, helping these brands to market and developing their brand message and developing the brand itself, we start with the consumer. I mean, it all revolves around the consumer, understanding them on a deeper level, and being authentic about it. And you know, because if you come in as many of the brand paths and many of these companies have, where it’s totally ignoring, not only your people that work for you, but the consumers themselves, you know, it’s a recipe for disaster. 

 

CLR: And I think, you know, that would be a little bit of, you know, kind of lead into your take on the 2020. Cannabis, year to date. I know, it’s kind of been a little rocky, to say the least. But the, you know, the current landscape, we’ve got this election, we’ve got new states that have legalized, you know, what, what are your your thoughts on? Not just the California landscape, but just our current national landscape? in general?

DA: Yeah, I mean, the other night, we thought we’re starting to see the dominoes fall. So, you know, I would have never thought I would be Mississippi don’t medical at least right. That’s the first stage. And I think it’s going to continue and I think what we’re going to see from now and going forward, is states take matters into their own hands. 

I really don’t believe we’re gonna have any type of federal legalization anytime soon. decriminalization will have states creating their own regulations and law.

 

CLR: So I was talking more about the business climate this year and it’s been obviously a little bit off and I know that a lot of the business impact, I mean, for your business and just starting, what has the business impact been so far?

DA: Things evolved. So for headquarters, we definitely did make a pivot. So at the end of 2019, our focus was kind of more international, right? We were we, we developed a partnership with ICAN, the guys who throw on cannon tech in Israel, they had an incubator, we were looking at, you know, identifying which companies had interesting products that we can cut, you know, commercialize and bring into market in California.

Then, you know, come February, we’re preparing everything, marches coming around for the next can attack, it was planned to be their biggest one yet. And COVID basically hit. So we, a lot of the companies that we were engaged with, are at a pause, because they didn’t want to spend the money, they everyone want to kind of figure out what’s happening next.

You know, we don’t have our grand launch at at can attack. So we are looking at, okay, we develop this system, right, this this way of bringing products to market in six months. What do we do next, and the first thing we do is actually look inward. at California. And the US, what we saw was, there is a lot of interesting stuff happening in the US.

And we wanted to kind of adapt to make that happen. And now what we’ve got is, we’re really looking to bridge what’s happening up north, in Southern California, because NorCal and SoCal, it seems to be like, there is a border, because a lot of what’s happening in our town doesn’t really make its way down south and vice versa.

It’s still, we still don’t quite understand why I mean, what we do know is kind of the 8020 rule, like, we have all the production happening up north, right, and then you have down south is a big consumption area. But up north, definitely more traditional focus in terms of flour and those other products. But there is a lot happening on the innovation side. And, you know, even innovation on on the cultivation side is happening up north.

And so, you know, we’re trying to really look at how do we engage ourselves with Northern California companies and help bring them down south and help them out, as well as other operators in other states, you know, that are looking to kind of become msos and, and want to get their feet wet first in California?

I mean, they all understand the nuances and the headaches of entering a new legal market. And because every state has different regulations, and it’s definitely there’s no, there’s no real synergy, and, you know, operational, almost a different organization. piecemeal together, that’s for sure. So we started looking at these places, and we would, that’s where we primarily focused on now, recently, that’s been our big pivot.

But, you know, in terms of the business climate in 2020, I mean, even COVID, the first thing I thought to myself was, obviously deliveries gonna blow up. I think consumer behavior is going to change where they’re gonna buy, they’re gonna come in less frequently, and they’re gonna buy larger bowl, and we’ve seen that happen. So you know, we’ve seen brands kind of shift to more, you know, quarter ounces, or more package deals with other products.

We’re, we’re seeing value brands really exploding. We’ve seen a lot of, you know, more premium brands now create their, their sister companies that are pending changes. So we’ve seen that happen. But I still think that there’s this huge opportunity, because we’ve seen that the industry hasn’t taken the hit that other industries are taking, you know, we’ve added about 100,000 jobs this year, in cannabis itself.

California brought in I think it was like 200 million in taxes. Right? And so and then they’re like 80 million in sales tax and it doesn’t include the taxes with the city, right? That’s only the state of California. Now you have cities that are bringing in much more cash that they wouldn’t be able to help pay for this program.

And then in the end, no cannabis company got any bailout, or loans from the government due to COVID. So, you see that kind of resilience in the industry, right, we we kind of all buckled down and we may do it. We don’t need a handout and we’re able to make it out.

 

CLR: I think that’s very true. I mean, Cannabis just shifted a lot towards, you know, the contactless transactions and payment, you know, cashless payment solutions. And as you said, the stocking up and states lifting limits on how much people could buy. And I mean, I think the cannabis business literally just started building a new box, like just said, okay, we are getting out of the box you gave us, we’re just going to build a new one. Just one we think is better.

DA: Yeah, I mean, you kind of have to make do, right? You like, what was crazy is that we’re the most over one of the most over regulated industry, because of what what we’re in, we’re still able to navigate that terrain, we still navigate without banking, we still navigate. I mean, we were just taking the punch, but we’re still standing.

That’s why I’m so bullish on this industry itself. I mean, you know, and California, already hit rock bottom on the legal industry. I really think it’s going up from there. I would agree with you on that. And I know, I’m sure you know more about the trajectory than I than I do.

But I think that, you know, you’re right. I mean, it’s basically seeing the bottom, and I think now at the bottom, dropped out, there’s enough companies that are in, as you said, the value based companies, the companies that are innovating, and and the end they increased communication and that supply chain that you were talking about?

 

CLR: It’s interesting to me that you brought that up, because you know, as you Florida, of course being vertically integrated as for now, I mean, the courts haven’t decided, but for now. And so like how is it then when you’re talking about being bullish on the market and the investing? Like who are your ideal candidates?

Would you say for like the companies that are doing it right, that you think really have the right idea going forward? What companies that are ideal candidates for the launchpad? Is that what you’re after? Not company names, just types of companies like what do you look forward to that have the most added value already? Like internally?

DA: Yeah, I mean, we, I mean, the launchpad itself, we only work with the consumer facing brands. What we do on the on our Baghdad, internally is, we’re trying to solidify the supply chain as much as possible. I think, what we’re trying to fix a lot and find the right partners for is heavily focused on the distribution side.

And this is California specific, right, every state has its own problem. So it’s not like Florida, where you have that vertical, there is companies that are vertically integrated. But in California, you know, it’s identifying the cultivator that can that can actually support your your product and grow to your standard is identifying the distribution that can support your growth and, and have access to products that can move your product fast enough to kind of adapt with you and not over charge you 30% of what what you sell, and short term thinking cash grab, and then having the right teams involved and helping facilitate all this and the right reputation.

You know, California only has I think 900 retail, right? And 200 of those deliveries, the rest are physical. So with 700 stores, which may be you probably can you really want to be in probably about 300 of those stores. So it’s still highly relational driven. It’s creating relationships with the buyers with the owners, understanding where your brands belong. So, you know, we’ve been, everything we’ve been doing is identifying every step of the value chain, how we can maximize the potential for those value chains and make sure that, you know, no one like we don’t get the rug pulled out from under us, nothing collapses.

So our brands have the infrastructure and support that they need to grow. And where where we’ve been really excited about is and everybody in the beverage space. We I’m really, I really focused on as a formulation driven product. So more wellness driven, different intake methods. That’s where we really want to help support because that’s where there’s like the least infrastructure to support both companies. I think kind of the brands that want to focus on using cannabis as another ingredient in their product.

 

CLR: Right. It’s not isn’t the focus. It’s not the main thing. It’s, it’s another ingredient that complements the the formula

DA: Right, and you have this kind of holistic approach to it. Those are the ones that were really interested in and that are looking to make a change. And, you know, those are the industries that I mean, that’s the products that reach into other industries.

And when he starts talking about cosmetics, when you start talking about beverages like those are the ones that that’s not the cannabis industry, that is the beverage that is the $4 billion cosmetic industry that is extremely excited to look at. 

 

CLR: Yes, the consumer goods part of it. I agree with that completely. I think that, you know, that that’s what I’m seeing is that influx of things, you know, like face masks and beverages and companies, as you said, that are very well established as far as the product itself. And they’re just adding this as an extra —it’s kind of like the cherry on the top.

DA: Yeah, and we’re starting to see more of it. I mean, you know, we’re, we’re seeing more companies come to market and not have like in big letters, 20% 30% THC, right, it’s less about the whole of how much THC is in it and more about how this affects your body. What is complemented with this is just another ingredient in the formula that is meant to route Pacific indications. 

 

CLR: And I think you’re you are as far as talking about the the wellness. And you know, that side of it. I mean, the influx I’ve heard of called a tsunami of that age group, the demographics of Baby Boomers coming into the market. And they are looking more for the wellness. And like, as you’re saying the consumer goods type products that they recognize, that may have cannabis in there. Yeah, I’ll try that.

As far as that goes, let’s say you have your brand, and you’ve worked with your brand. And you are getting them ready to go into let’s specifically, let’s say, the California market in that six month time period, what is the biggest challenge of that part?

DA: That’s the hard one to identify, because there’s so many challenges. We walk you through the steps and each challenge and so on the launch pad, but the first step, the first phase, is we spend a month on pure data and research. And we call it the ideation phase.

So understanding if the brand has already a product that they’ve developed, and they wanted to bring a market, so we identify their consumer, and we want to identify them on a very deep level. We don’t just want to take the data that’s out there that they tell about, we’re going to target 28 year old females who make over $80,000 a year and the back end doesn’t tell us much.

And we need an extremely deep level, why? And who the consumer is what speaks to them, what their what are their values, what is their mission? And how does our brain fit in with them. Because that that’s the starting point for everything when we’re talking about developing the brand. So what we did with that is to help kind of solve that problem, because the data is just not out there. 

 

 

But again, those are the bare basics. Like if you tell me, when I tell you 28 year old female who makes $80,000 a year, I can take two of those, there’ll be two completely different people. One might be a heavy metal, and one might be at the classical music. And those are different. They’ll have different tastes, different values and all that it doesn’t tell me enough.

What we did was one of our partners and quarters guy by the name of Corey Jones, we partnered with him to develop a beta program that essentially has to look at a brand new social media following a new brand, we’ll look at who their competitors may be or brands that are just like them and other industries.

And we look at their social media following and we start to look at their entire all the followers what they do online in terms of what they interact with and on social media, Facebook, Instagram, Twitter, all those, what they like, who they follow what they comment on. And we have a unique analysis that looks at what they the comment itself, whether it was good or bad comments that we can develop, like understand whether they liked it or not.

And we’ve had to develop a picture and we’ll call it a brand affinity that really goes deep into what the consumer likes, who they engage with, what they read what podcast they listen to All of that. So we can really understand who this brand is speaking to, and what kind of messaging they have to have, what kind of language is brand new be used to come in for their audience, authentic level, and not just assuming this is what they like. And that’s the first step.

The second step that we take is not taking all that data and research developing the brand itself. And now, identifying the key supply chain partners. And that’s, you know, not an easy job, it’s becoming a lot easier for us now that we’re putting all the pieces together and the puzzle together.

It’s identifying, okay, who is going to be the producer for the topical, the right, who’s the right producer for this, who’s going to be the one supplying the product for this, who’s gonna be supplying the product for there, and plugging all the pieces together and making sure that these are reliable partners that when we do start scaling, they can scale with us.

And so it’s identifying those and doing that first kind of run a product. And then the third phase is we spend about two months, in stores, doing pilot pilot, we want to get three to five stores, we want to get the consumer feedback, we want to get the buyer feedback. And we don’t want to only understand where what the buyer thinks.

And we don’t want to just understand what the consumer thinks when they look at the packaging, we want to understand where the consumer puts their product at home. Where is it being stored? What time? Are they using it? How are they using it? What is the job to be done for this product?

That allows us to now make any tweaks or even tweak so we can actually take a product in the market and scale in California after those big bucks.

And now, when you scale out, have you run into the other issue of Okay, there’s only 700 physical retail locations, which ones are we gonna identify that we need to be in, according to who our consumers are all the data that we collected six months ago, where are the sources we need to be in and developing those relationships with their stores to have the product because I’m not wanting to pay for shelf space. And I’m not one to pay to play.

And I don’t want to do anything. I think that’s totally wrong. And it hinders growth, and it prevents small companies that are extremely innovative from coming into the store.

So we want to find the right partners for these brands that can help them grow. And that can actually educate the consumer in a correct way. And that’s been the biggest hurdle is making sure the brain is portrayed in the right way, that when it’s a formula driven formulation of a product that is going to be presented, the medication is going to be there.

And that’s been kind of one of the things we’re now focusing on is what is that next stage look like.

CLR: So after that phase that all of them have names like the ideation phase, then do you have a name for each phase?

 

DA

Yeah, we have we we have the first phases, phases, ideation.

The second phase was development.

Third is pilot.

And then that fourth phase is kind of a broad one is scaling and simply California

 

CLR: Okay. And so have you ever considered with everything you just said, it sounds like you might be able to start an HQ analytics branch.

DA: You know, that’s an extremely expensive line of business. But for the data side of things, you know, that’s something that we’re partnered with great companies like consumer insights. And we partner with Corey to create this social media brand affinity data that we’re bringing to market is slowly but surely, we’ll be collecting much more data from the pilots and everything where I could definitely see that happening.

 

CLR: BDS analytics and those companies that are doing it, it’s just not enough. It’s not deep enough. It’s not complex enough. And I think the way that you just explained to me those phases, that’s really the way that a brand needs to go through to become successful in that patient and profit centered way we were talking about earlier.

DA: Definitely, definitely. And you know, with the data, I kind of always give the example of I do a batch of videos. But if I do a survey, which they do type beer out of their consumer intelligence there, they ask the question. If the question says you know, all your wasted, you know, socially

Of course, they know, but then I take my, my data somewhere and I start to look at what they do online. And they start following you know, KKK things and their Nazi forums or whatever, I’ll tell you, they’re actually a racist. And we understand that that’s the real truth. And that’s kind of the whole idea, action, you know, we can tell you by your actions versus what you tell us. That’s kind of the concept behind it all. 

 

CLR: And that’s interesting, because I interviewed Todd Sullivan and Michael Scott, at Cannapreneur Partners not too long ago. And they were basically saying that data is basically data is key in the future of cannabis. So I would say, you agree with that saying?

DA: 100%, especially, you know, I’m not trying to just like, push this data thing, but this brand affinity that we’re trying to develop, I think it will be table space, not just in cannabis, but in every industry, data takes you on a much deeper level, they need to understand the consumer.

 

CLR: Right, and it sounds like that is something then you’ve cultivated with your team to help not just bring in the brands that you think can really, really help the consumers, but you cultivate it.

DA: Yes. Kind of organically, we definitely put into this to kind of go through the steps and the timeline, and how long each process will take. But, you know, on the partners at headquarters, we’ve all have done this in and outside of cannabis.

So we’ve taken, we kind of said, Okay, what steps do we need to take if we were to launch our own brand? And we wrote those steps down? And we went through that entire process? And we said, okay, what did we miss, when we did our own brand, right, and we put it in, and then we started comparing, this is where we feel like is, is kind of the most efficient way, the fastest way to bring a brand to market to get a proof of concept.

Because that’s the goal of the launchpad is proof of concept that you can then go out and we can help you scale, you can then go out, raise the money, you need proof of concept, or you can raise the money and spend all the money on just getting a proof of concept and get it as cheaply as possible. That is the goal for us. 

 

CLR: That kind of leads into my question I had asked about about, you know, what you feel you do that makes the most impact. So I would say, you know, as a brand, and and, and as a as a company, excuse me, HQ is is is leading the way and trying to bring that proof of concept that innovation directly to the consumer. It sounds like a long process in between. and and you know, but I think you’re, you’re handling that the right way. I mean, do you feel that that’s because that’s the impact that you really need to be making in Cannabis right now.

DA: After spending three years, knocking on doors in Israel and talking to people in Germany and kind of seeing where they all found this industry going, I see the potential this industry, what I saw happening in California is due to the regulation. Still, only a third of municipalities in California allow cannabis activity.

You have extremely high taxes, we saw this bid entry. And you know, when we started talking about a $20 billion California industry, cannabis industry, you know, in the next five years, that’s not going to happen if we don’t have more products in the market that are differentiated innovations by that brings in the new consumer that everybody talks about, everybody wants to be consumer.

And so we need to have these products, we need to have these brands that are part of the status quo, we need to have these brands that communicate with these different consumers that create awareness that cannabis is much more than a smokeable product that much more than a edible that we’ve all seen on TV and we probably have the experience on in college. It’s much more than that.

We wanted to create this environment, to have brands be in the market and build that awareness and that connection with these consumers that will actually grow the market, the overall cannabis market because right now we have an $8 billion market cap5 billion of it is a traditional, 3 billion is legal. Okay, that’s, that’s kind of what it’s been already for, you know, 8 billion.

So we still haven’t had this, you know, monster wave of soccer moms and everybody was talking about jumping into cannabis. Right. And that’s because I believe the brands that would speak to them haven’t been created yet. And the products that speak to them are in the market yet. So we want to be helped create that environment that kind of allow these companies to get into the market navigate the market, to give us a chance.

 

CLR: Right. And I think you said that brilliantly, because I 100% agree with that statement is that there’s been this, quote, unquote, audience for these products that has ever really arrived with their ticket yet. And I think it’s because they’re waiting for the right movie. I just feel the same way. I’m with you. I think they’re waiting for the right brand that speaks to them and what they really need, not just what the market currently thinks that they weren’t.

DA: That’s exactly it. You know, I have many conversations, and I always use my mom as an example. She probably hasn’t touched anything related to cannabis in college. And, you know, they’re already she’s already starting questions. And her friend group is asking question there is that, yeah, whatever we call the candidate, period, but they’re not taking that leap, yet.

They’re just skeptical. They’re not sure. And that’s because, you know, I really do think that a lot of these brands haven’t been able to come into market that would speak to these consumers, that would eventually, you know, grow this market and reach that $20 billion potential, but we’re just not there yet. 

 

CLR: That speaks to the investment part, you know, and that is that the there are so many companies out there that aren’t willing to do the required work. I know, you’ve been quoted as saying that “it’s not always best to be first,” I think something along that lines.

And I agree with that as well, because it ties into that same concept that sometimes being the best, and the first, you know, the first is not going to be the best because you don’t know what you’re doing right and what you’re doing wrong, you’re just doing it.

DA: Yeah, I kind of, I think of it as like a guy in a jungle with a machete just chopping the pathway for everybody else. I don’t know when something’s gonna be in the face, or someone’s gonna attack me or whatever it’s gonna be, you know, in cannabis, specifically, because it’s like, it’s an old industry, but it’s a brand new legal industry. So everyone’s still trying to figure it out.

I went through it, trying to, you know, we got rehab licenses, we went through the process, it took us a year and a half and a million dollars. You know, it’s not, it’s not something, it goes against all kinds of judgment, if you consider yourself a business person, to kind of justify that, and we had no idea that was gonna come. I mean, the city we went and got our licenses in, they were like, We want you guys in here. We want to work with you. We want to get you in here. 

But then, when push came to shove, they’re like, Whoa, whoa, whoa, wait, okay. This is cannabis. You know, they think they don’t know what they’re doing either. So we have to walk them through it, show them that this is just like any other industry walk the fire marshal through the process. city planners through the process, we have to change the tax code, because they were taxing us too much.

We can do all these different things. And in the end, we’re paving the way for the others, which, in my opinion, is better, really, especially, you know, what we’re seeing already. companies do that, and understand what mistakes being made follow their footsteps, and be you know, tread lightly. And that’s why, you know, I get a lot of flack for it. But I know a lot of companies like I understand, you want to have the best flower I understand you want to have why spend the million dollar high end greenhouse facility, when you don’t even know where you’re gonna be selling it to.

You don’t even know where you’re gonna have product market fit. You don’t know who your consumer is. Why waste that money by not just purchase flour that meets your standard and getting to the market, okay, you don’t make good money, you want to make 10% on your money. And at least you didn’t spend a million and a half $3 million on a beautiful facility that’s going to lay empty. look like you’re doing in Canada right now. 

 

CLR: Right? And I mean, the way you just described to me, I’m sorry, I’m gonna show my age, but I can’t help but think of Scooby Doo, because I’m kind of like, you guys have gone through and pulled off of the rubber mask for me. So I know, the good news, the good brands are in the end, like the ones that actually make it.

And I honestly, Daniel, I have to commend you on the focus on the consumer, because I mean, I just picked up on that throughout our entire conversation is you tend to always come back to the consumer. And that’s very rare because people talk about the consumer as if they’re this disembodied entity. Then they realize that that is where the value of your brand comes from: that consumer.

So you know, they’re the one buying it, you have to pay, it doesn’t matter, right. And I really think that you’re doing it the right way your process sounds, as if you know, you’re taking the time, the steps to walk these companies through this the right way, so that it’s not just an idea to them anymore. And it’s not just a lot of money layout. It’s not just the capital, it’s the whole the whole picture. And that’s your ultimate goal.

I would say, then, what would be your best advice to offer individuals who want to invest in cannabis, as you said, it hasn’t really taken as much of a hit, it’s been deemed essential service. So there’s a lot of consumers who are now thinking about like, “Hey, what do I want to take the next leap and maybe invest in this for the future,” because they’ve done their homework as you as you mentioned. What would be one piece of advice.

Daniel Abrahami, HQ California Launchpad

 

DA: Yeah, I mean, if we’re talking, you know, in the market, again, publicly traded company, let’s say, you know, I would, I would look for the companies that have spoken, if it comes down to focus and not trying to be everything to everybody.

It’s the same thing with starting a brand is the same thing with starting any business a candidate, you want to focus on whatever vertical, you’re going to operate it and be the best at that. If that means you’re a distributor, and you want to develop a you know, a logistics hub and throughout California, that’s where the focus should be, you shouldn’t start focusing on cultivation initiatives shouldn’t try to think okay, I should make a brand, I think that has been downfall of most of these companies in cannabis, is the lack of focus. 

You know, if, if I’m starting a company from scratch right now, I am picking one vertical. And I’m damn good at that. And I’m going to try to get as much market share as I can and that and then start adding to whatever, adding whichever vertical, I need to complement where my expertise is, what’s the best fit, what’s the best next move, I’m not just going to jump into cultivation, because it’s the cool thing, because I have no idea how to sell unless you have the team that is just cultivators that you’re able to bring on, end games cultivating. But other than that, don’t touch it. be focused on what you’re doing and your primary goals in and grow from there.

There’s no rush. That’s the biggest thing is patience and focus. I think patience and patience is a virtue and it’s a virtue. A lot of these companies don’t have, unfortunately, because it’s just not I mean, the ones I think that you’re right, and they need a combination of patience and focus.

It’s not really enough to have one or the other in this market. It’s just too it’s just too little. It’s too little. You’re not offering enough. 

 

CLR: I’ve really enjoyed speaking with you. I think that you as I said, I’m really intrigued by the way that HQ is very focused on the whole concept of making this work, not just bringing these companies to fruition, but it’s actually helping the system get working by having good brands available, and by having the best brands to focus around.

Is there anything that you would like to leave on the minds of our audience?

DA: You know, the only thing I would leave in California and the cannabis industry, in the whole is kind of invent that everyone kind of knew that baseball metaphor, the effect of having an extremely early, and things are getting figured out and nothing is perfect.

But it’s one of the most resilient industries that I’ve ever experienced, that I’ve ever seen.

I mean, you know, to kind of go from illegal substance to, you know, with a narrative that was totally against cannabis. So now we have, you know, 70% approval rating on cannabis, we have more and more states coming online. 

The industry itself is changing. I mean, now it’s time to really start looking at where cannabis belongs in our lives. And I think it’s a net gain for the world. And it’s its own only going up from here. 

 

CLR: I think so too. You did mention briefly that you don’t see the full federally legalization thing happening anytime soon. I personally am also somewhat wary of that as well, because I just am not sure that we have, you know, life figured out yet, let alone cannabis.

But what do you think about de-scheduling, so we can do some research like they’re doing in Israel?

DA: Yeah, and I think that’s probably gonna happen, right. I think it seems like a couple days, but it seems like providing Harris administration, I think that they would be such a pain. So I definitely see that happening.

And I see kind of similar to kind of like, Roe v. Wade is like putting the power into the state and saying you come up with your own regulation and letting them handle it. And that, you know, the scheduling will open up a whole new wave of innovation and studies will start happening.

I mean, that’s going to be extremely exciting to see I think that’s where Canada kind of dropped the ball, I thought was not focusing on research and in Canada, but hopefully the US will take that. And hopefully we don’t have too many special interests involved in that process.

 

CLR: That is true. That is one thing on our side is that special interest in lobbying don’t get to that that level all the time. So that’s a bonus. 

Thank you so much for your time, Daniel. It’s been a pleasure speaking with you, and thank you again, for all you’re doing for consumers and for companies, for brands, for focus, all of it. I mean, I think you guys are really doing a wonderful thing, not just for the California cannabis market, but for all of us.

DA: Thank you. Appreciate it.