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Interview, Part 2: Nabis Founder Vince Ning

October 18, 2022

In the second part of our interview, Vince Ning, founder and co-CEO of California cannabis distributor Nabis, discusses conditions in the Golden State cannabis market, the potential for expansion into new states, and prospects for near-term legalization at the federal level. Nabis distributes over 200 brands and ships $350 million in cannabis products annually to dispensaries across California.

SNDC: What business trends are you watching in California’s cannabis market?

Ning: We’re certainly in a recessionary market environment. Cannabis is very much like alcohol in that it’s a recession-proof good. But at the end of the day, capital is expensive, cash is tight for many, and so people are definitely gearing more towards bang for buck. Everyone’s looking for the value brand. And that’s definitely a big trend that I’m seeing a strong reversion towards.

There’s always room for innovation—and other categories like pre-rolls, solventless vapes, and extraction methods for products are emerging—but the largest category and a broad swath of the market is flower. And within that, it’s value brands that are taking market share. If you double click into that even farther, no single brand has significantly dominated the flower segment. It’s very fragmented.

SNDC: Are more dispensaries part of the solution toward fulfilling California’s legal market potential?

Ning: Yeah, certainly. With the new tax reform, beyond just eliminating cultivation tax and shifting the excise tax responsibility to retail, the government did approve of something like $20 million in state level funding for municipalities to open up cannabis programs so that they can provide more access where there’s cannabis deserts out there. There’s a stat that’s been floating around that everyone generally agrees upon—only about two-thirds of California municipalities have retail dispensaries and delivery businesses, or just access in general for the legal market. That leaves a third of the California cities that don’t have legal access. That itself is a big tailwind for the illicit market and a reason why it exists so largely in California. So more retail access will certainly help, and the state level funding will obviously lubricate that process.

SNDC: What’s your view on Nabis entering new markets?

Ning: Our business model works in state markets where the dynamic is that there’s a ton of fragmentation or competition on the supply side for brands, as well as on the retail side. Our main value prop is, one, streamlining order fulfillment and the order transaction process. And then two is the payment transaction process. So if there’s only one player on the brand side and one player on the retail side, there’s not much work for us to do. But the complexity exacerbates when there’s tons of operators trying to transact, and that’s where a distributor can really be that streamlining business to serve a function in the supply chain to make things more efficient.

SNDC: How are you dealing with the uncertainty around federal legalization?

Ning: If anything does happen in the federal landscape, while it may change our strategy to be more aggressive on expansion, I think it’ll also open up a lot of space for capital to come into the industry as well. There will be a bigger need to grow, but also the resources to support it. So I think that’ll be a big boom to the industry in general, and obviously we’re supportive. We try not to make any big decisions based upon when it will happen, but if something does occur, we’ll have to come to the table to figure out what our gameplan is.

SNDC: Any final big-picture thoughts on where the industry as a whole is headed?

Ning: I think you touched on a big piece of it, which is solving taxes and providing more retail access. That’s just something we recognize is one of the biggest bottlenecks right now to ensuring that the legal markets arise. There’s tons of consumer demand out there. We just need to figure out ways to get products to them through legal channels and do it cost effectively.

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