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Taking Cannabis Companies Further And Faster

Taking cannabis companies further and faster with Dave Roberson the CEO of Kukuza, a RoseRyan company. Kukuza helps cannabis companies with finance and accounting. Kukuza Associates are committed to taking cannabis companies further and faster with proven cannabis accounting and finance solutions. Accustomed to the hectic, high-risk pace of Silicon Valley, our consulting firm offers a broad range of strategic and tactical finance solutions to meet a cannabis company’s every need, at every stage of its lifecycle. We bring expert cannabis finance expertise to all types of canna companies, including cultivators, extractors, manufacturers, distributors, retail businesses as well as investors. Focused on the unique needs of cannabis businesses, Kukuza Associates calms the chaos, lays the critical foundations to scale rapidly, sets up the company for maximum growth potential, and readies the business for investors and dealmakers.

A Silicon Valley powerhouse, Dave leads the charge at Kukuza Associates to help cannabis companies of all sizes and across all segments (growers, extractors, manufacturers, distributors, retailers) reach their full potential by having expert finance capabilities behind them. His know-how on the industry was tapped for an Accounting Today cover story about the few “pioneering” firms that have dedicated solutions to the accounting and finance needs of cannabis companies. Dave previously spent six years as an advisor to tech companies, leading major projects in the areas of finance, strategy, due diligence, capital structure, corporate governance, sales, and human resources. One of those projects involved heading up a dedicated RoseRyan team of over a dozen finance pros who provided transitional services for the Symantec-Digicert divestiture. Dave is also a vice president at RoseRyan, where he is on the leadership team and oversees the firm’s expanding presence in the private equity space.

 

Transcription:

Get informed, get inspired, and get connected.

Thanks for joining us for another episode of NCIA’s cannabis industry voice on cannabis radio, I’m your host Bethany Moore, I’m the project communications Project Manager at the National cannabis industry association. Today my guest is Dave Roberson, he’s the CEO of an NCIA member company. KUKUZA. it’s really fun to say. It’s a Rose Ryan company. They help cannabis companies with finance and accounting. We all need that. Welcome to the show, Dave, thanks so much math, any I’m excited to be able to join you today, absolutely so let’s jump in and get to know you a little bit better. I’d love to hear more about your background and your experience and your industry experience before coming to help out the cannabis industry, what did you do before that?

Yeah, I actually was trained as a lawyer and started working as a legal consultant when I got out of law school and after a couple of years, I moved into the technology industry starting as a lawyer, stayed in that industry for about 35 years, and during that time I worked in virtually every business discipline Legal, Finance, HR, IT sales supply chain customers finally R & D ending as the Chief Executive Officer of Atachi data systems, and then a period at HP running storage, for them as well.

So, I’ve had all the C-suite titles, Chief Financial Officer, a Chief Legal Officer, Chief Information Officer. So, I’ve had a lot of rules where I’ve had to set the policy and make sure the company accomplishes goals in that particular field.

About eight years ago, I shifted back to advising and consulting with companies decided that I would enjoy that more and during that time advised four or five companies a year, typically and the… During my career also, I served on a number of boards, five public companies and the 10 or more private companies and on the public companies, one of note for this industry is a company called IGT international gaming technology, and that was a very highly regulated market, where I had to be vetted by the State Gaming Commission, and various other entities for about 60 different licenses, if you will.

So, I’m real familiar with what it’s like to be in a world that is a reoriented it.

So it was interesting in the kind of way I like to look at is I’ve done a lot of different things and it’s given me, a lot of different perspectives on problems rather than thinking everything is a finance problem, or a legal problem or an RD, problem, they’re all interrelated. And I’ve tried to keep this very wide view over my career.

Yeah, absolutely, having warn so many types of hats, seems like it gives you a pretty well-rounded perspective on just about any business.

Yeah, that’s what I try right for certainly awesome. And by gaming I’m guessing we’re not talking about online racing games necessarily, we’re talking about…

Yeah, casinos. And that… That I… That’s right, very regulated I’m sure.

Yes, a lot of compliance like… Yeah, I think the cannabis industry can relate a… So, it is an interesting parallel yeah, yeah, so speaking of the cannabis industry, which is why we’re all here, how did you make that shift into getting into cannabis? And is there any kind of inspirational reason why you decided… Cannabis, cannabis is where I wanna be sure, so as part of my consulting I happened to work on a project with Rosey and the parent of a was a one-year project where I led a team of 13 people to help one of their clients realize the value of a transaction. It was a divestiture complicated financials and was a big success. We finished the project 90 days early, under budget, so the client was quite happy and it gave me a lot of insight into Rose Ryan and how unique it is, and… Well, I was work the project, I got to know the folks at Rose Ryan and they told me about their work in cannabis and so, on and several months after that, project was over, they said, “Hey would you wanna work with us and growing our cannabis business. And I had gotten involved with the business to an investor that I know well, and asked me to look at a couple of cannabis companies he’d invested in and that got me enamored with it and when Rose Ryan said Come join us and help I got excited and what excited me was the industry, the people and the opportunity, all three of those things, and then cause in particular was the opportunity as we just talked about to bring all these different experiences, I’ve had working together with Rose Ryan which has all the consulting capability to really go into a new field and help that feel grow and develop, and I felt like it was a chance to get in on something. I know it’s not the very early days, but it’s still the early days of the industry where most of my jobs, it’s been more mature larger developed companies where the room for movement or the room for opportunity to do new things is much more limited.

So, I just saw it as an opportunity to work with some great people and solve some problems that could be solved, and again with my wide view, hopefully, be solved in a way that maybe is unique for the industry.

Absolutely, yeah, well, we definitely need all the brain power we can get as we’re navigating through this federal legalization journey. Absolutely, yeah.

So, Kukuza, of which you are the CEO is to help with the finance and accounting piece with the cannabis industry. Can you talk about Kukuza and your role there, and what’s going on with the company?

Yeah, I love too. So, we launched the company in March of this year. And the word causes a Swahili word it means growth, and potential. We really thought that captured what we wanted to represent to the industry. And I like it has a kind of ring to it.

I was wondering what the word mean. Thank you for clarifying that. A Swahili I like it, yeah. So, as you said, we’re focused on providing financial tools and advice or assistance to operators to help and grow their business and we’re really looking at any stage of company from the early stage assuming they have some Capital, obviously, or even if they don’t advising him on that all the way to well-established companies that are growing or acquiring. And we’re also looking at every segment so we don’t wanna narrow our focus again we think that be a mistake at this point. So we’re trying to approach and add value to any operator at whatever stage they’re at and whatever scope of business they may have, and we obviously approach a different ways depending on what those parameters might be and the way we wanna approach our customers, we start with what we call an assessment so we can do this as quickly as two hours interestingly enough, depending on the size and the complexity but take a quick look at where are they are, what do they know about their company, what are their issues, how big are they, what’s their licensing, how many entities do they have?

Several basic facts, but then that tells us Okay, would we want to work with them or where could we offer some advice or suggestions where they may need help, and we find a spectrum of capabilities, some of the clients we go in have season CFOs and they wanna engage us to help them on a project, some other companies, we go in and they’re newer, they might have a bookkeeper, and they don’t have a budget, or they don’t have some other things. So the assessment really helps us come in on what that client needs rather than “Hey here’s an answer. What do you need, right? So it’s built a good connection fairly quickly.

And then depending on what that yields we can supportive in a number of different ways.

And then what we’re trying to do is the same thing.

We’re advising our customers, right, so we want them to build a strong financial foundation so we’re working on defining our own value proposition and solutions, again with reference to what we learn from the customers. We’re meeting with a lot of companies. I don’t feel like every company I meet with needs to be a client. In fact, I look at every company I meet with this an opportunity to learn and if there is work that we can do great, and probably, half the clients I mean there isn’t work we need to do and that’s wonderful. I learn about their business, and that just adds to our capability, we’re building out a set of tools to do for the analytics and assessment for the companies and then obviously delivering services. And then another really important thing to me is contributing back to the center. So if we just kinda collect money from our customers and walk away and say That’s a good day, that’s not enough for me.

I think it’s really important that we invest in the industry invest in this sector with our expertise sharing that, working with “ncia working with other organizations so that we can help the whole industry improve rather than just we’re here, to make money.

Got it, got it. I really like the idea that you do an assessment or a discovery portion because you don’t know what you need, maybe you don’t know what you don’t know until you take a look at it and then you know where you can actually apply some expertise and assistance.

Yeah, that one, the customers don’t even know right they know, but when we ask them some questions, they don’t have the answer for it. Is like, “Oh I hadn’t thought of that before. And that then becomes a good conversation, sure sure nothing is one size fits all, or a cookie cutter everything that’s right happening absolutely.

Okay, let’s take our first commercial break and then we can come back and talk a bit more about best practices in the cannabis industry from your perspective. So we’ll be right back.

Alright, we’re back on NCIA’s cannabis industry voice on cannabis radio, and we’re chatting with Dave Roberson who’s the CEO of Kukuza focusing on finance and accounting support, in the cannabis industry and for the cannabis industry so Dave, let’s unpack one of these big picture issues about the volatility of our industry, which was exciting for you when you jumped in. But a little scary for some of us. So, despite its slowly maturing, we are maturing and becoming more sophisticated as we go. There’s still a lot of unknowns and regulations that can just change on a dime. So, I’m curious your thoughts on this exciting chaos in the cannabis industry.

Yeah, I, I think it’s a topic and I’ve always believed that chaos and volatility is not necessarily a bad thing, it really is a chance to create opportunity if you’re prepared and that’s why we really focus on getting folks prepared including ourselves, and the two volatilities I think that are the biggest right now from my perspective and there’s many others, but one is certainly the regulatory landscape everybody talks about that licensing taxes banking, all the challenges with delivery across borders, across town, even some cities. So you can’t, some city say You can the state then it. There’s no clear answer on a lot of that, right? Another volatility that is, I won’t say new but it’s happening as things mature is the competition a lot of new players are coming into the field and it’s… You hear the term “the green rush. I think players may come and then I really don’t understand or have the legacy knowledge but they might have capital, so it allows them to play in a different way. Supply and demand balance imbalance is… I think another thing we’re seeing is California produces a lot but doesn’t consume a lot. What do you do with that and how is that addressed? And then if there’s more supply than demand prices drop, which is another volatility. And then I think another one that I think on the competition side, and we see this in technology a lot was, what I call a commoditization right? So there’s still some specialization. Hey, my product is different and special and better, but as things are more regulated in the industry kind of settles out. I think distinguishing a product becomes very important and if all you’re competing on is price, or volume, that’s a little bit harder. So that’s another volatility, I think that’s gonna play out over the next three to five years.

Yeah, that makes sense, and I was talking with some other people from our marketing and advertising committee. They really feel that branding and your marketing is going to be the way to distinguish your product from a sea of products on a shelf for… So Bethany I couldn’t agree more. And I name recognition of branding in this space will be very important. Over time, I, I couldn’t agree more.

Yeah, for sure. So do you have any advisor best practices here for dealing with maybe some of those things that you’re mentioning or what ways these cannabis company operators can really get on top of these challenges?

Yeah, and I call it getting your financial house in order, and I’ll talk a little bit more about that, but that’s where I start. And great products and ideas and capital are super important, but if you don’t have your financial house in order, you may waste or lose the opportunity, right?

I’ve already said there’s a spectrum of capability or foundation, we find when we go out and talk to folks, but the key thing is having a set of financial systems and processes that help you understand where you are, and I call it one clear, simple version of the truth and a lot of times, what’s your inventory? I’m not sure what’s your cost of producing an ounce of buds, or how… What’s your bird how much are you spending per month, how much your fixed cost versus variable costs, what’s your cash flow?

Those are all really important things that operators need to understand, but if they don’t have a good financial system, how are they gonna understand that so they may say, “Well I know how much cash… Oh yeah, well that’s great, but how much did you have last month, how much you’re gonna have next month then what’s your capital plans? Are you gonna add another cultivation facility, or you gonna buy another dispensary? How are you taking that into account? So the first thing is just have a good set of factual accounting information that’s one clear, simple version of the truth. And then the next thing is what I call a business and scenario clan, so have a view of… Okay, here’s where we are now, here’s our cost structure, here’s our revenue picture, here’s all that, here’s where we see that playing out, we’re gonna buy this, invest in that, or grow our dispensary ’cause we’re gonna get better products in there, we’re gonna market it, better, whatever, and then have some scenario planning that goes with that.

So, for example, what happens if there’s price volatility, what if the price you can get in the market, drops by 50%, what does that do to your business? What if the price goes up 20%, what does that do to your business? What about demand what about capital availability? So being able to look at some of these really important variables and say, “what if… And then you can make some decisions and then you can do again if you’re tracking this information about your business, let’s say you’re ahead of where you think you thought you would be then maybe you invest more speed up, maybe you’re behind you say, well, maybe we shouldn’t buy the ex-dispenser ’cause we really haven’t assimilated the one we just bought, and it hasn’t given us their profitability or the revenue, or the cash flow or whatever the metric was that we were looking for. So I call that Scenario Planning, but having a good baseline and then building your scenarios off of that.

Yeah, it definitely takes a lot of thoughtfulness when we’re dealing with these kinds of big risks. Truly, that’s right, and then everybody’s used to these tools either at T if you’ve never done it, it seems daunting and it takes time, it’s not something you build it in a minute, or two, right, or even a day or two, but I think it pays off to put the investment and to do that.

Yeah, yeah, very much agree. And no man or a company is an island and I do everything so we must, we need to connect with others, we need to rely on other experts because we can’t be an expert on everything. So, by old in that strong professional community is so important just so, so very important.

Yeah, we’ve tried to build a good community of what I… Call-minded professional firms, for things like accounting and legal and tax and we find that working with those companies and working with our clients, it’s a great thing. And so we’ve helped a couple of our clients solve problems. That we just don’t have the skills to solve by connecting them with people that really understand the industry, that are committed to it and we’ve also find some folks that… Oh, we’re just in this we’re gonna make a quick buck.

We try to stay away from them because they don’t really have the level of commitment that we think is appropriate to really provide valuable services.

Yeah, couldn’t have said it better. Absolutely. It can be very chaotic, and people who don’t know the volatility, when you lift the veil of what it takes to make this industry go will be in for a rude awakening when they’re in the thick of it, I think, and they’re overwhelmed with regulations and compliance issues and investors and banking. And yeah, I totally get it. So before we jumped to commercial all this can be very stressful and scary, but it is kind of fun and it is very fulfilling if you’re the kind of person that does have a passion for the industry and is in it, for the right reasons.

So, on stress and the sweat and the tears, I think is really worth it. At the end of the day, and as we continue to make progress both for our industry economically, but also in the halls of Congress, it’s so worth it. So for this strong industry community that we’re building, it is, I almost want to give a little… Not self-help, but just like an inspirational hang in there, everybody I… Yeah, So Bethany, I couldn’t agree with you. More I look at is chaos. And uncertainty can bring unprecedented opportunities if you again have the foundation and have the commitment and passion just like you said. And my career is my greatest successes have come during the times of the greatest uncertainty and I’ve just experienced at many times, and it’s me excited because this is a period like that. And the success is there to be had for the folks that have that spirit you just described.

Yeah, Yeah, couldn’t agree more. Alright, we’re gonna jump to our last commercial break here, and then we’ll come back and wrap up our chat with Dave Roberson of Yakuza. Stay

 

All right, we’re back on NCIA’s cannabis industry voice on cannabis radio. You’ve been listening to your host Bethany Moore from the national cannabis industry association and our guests today, we’ve been chatting with Dave from Kukuza.

I, I… Talking big picture industry and giving each other a little inspiration to stay and see how this all works out in the end, and successfully. I believe so, and I think a part of that obviously I’m biased, but being part of “ncia which is the largest national trade association and the oldest for the cannabis industry as we approach almost 2000 member count companies across the country that strength in numbers is a huge part of how we’re going to get to success. And now, your company is part of it, and I think you understand the value as somebody who has been in a lot of C-suite roles in other industries as to why being a member of “ncia is important. So could you talk a little bit about that?

Yeah, when I joined, we had already joined as Rose Ryan, I said, “Okay we need to join as Kukuza as well. So both firms actually, are members today. And from my perspective, I feel like it’s a great place for us to be advocates for the operators in the industry, and that’s a role, I think we can play and I love the way that NCIA has taken that on. The other thing that, from my perspective, you’re a wonderful source or NCIA is a wonderful source of information and the opportunity to network and meet people, and we wanna get… I personally, if we, as a company, wanna get more involved with “ncia and getting involved with the committees and some of the meetings and so, on where we can play an active role and as I said earlier, giving back some of the knowledge that we’ve had to improve the industry as a whole.

Awesome, yeah, appreciate that. And I do believe you’ll have an opportunity to share some of your knowledge at one of our educational panels later this year, at our Fall Conference, the California cannabis business conference in Long Beach, is that right?

Yeah, we’re excited about that. I’ll be participating on a panel that will be focused on Banking capitalization and money management, which is obviously a very… The big one was the topic for a lot of people.

Awesome, thank you, yep, so that is in October, the website for that is California cannabis business conference dot com. And before that next month in July is our big conference, the 6th annual cannabis business Summit, and Expo and that is July 22, 2013. 24th in San Jose, California at www… Cannabis business Summit, dot com. I’ll definitely be there running around with the video crew as per usual, chatting with exhibitors, and attendees and panelists and continuing to do the awesome, storytelling that I get to do, and I love our educational opportunities, I love that my colleagues really, they really make sure that the educational content is above and beyond. It’s quite a process to go through all these speaker proposals and try to fill just a handful of seats when we have so many great people and great speakers. It’s definitely a challenge. So I hope everyone enjoys the panels at all, of our conferences for sure. So looking forward to learning from you at your banking money banking in money panel session in October and the… We’re looking forward to being in the SOE in July, it’s right, our backyard. So we’re excited about that conference as well.

Oh, easy I like it when you don’t have to fly places, to say… Yeah, and I also just wanna mention our smaller networking receptions that we host throughout the year and throughout the country, it’s our cannabis caucus evening networking receptions and our industry socials.

Those are a nice way to just pop in for an evening. networking reception mix with your industry peers get connected exchange, some business cards and have a little fun.

We like to have a little bit of fun but also be informative and give you what you’re looking for is, as you look to us for what’s going on on capital hill in DC, for sure. And then lobby days, of course, which we just had our ninth annual, and CIA lobby days and it was amazing and cocoa folks to make it out next year for the tenth annual.

Yeah, it sounds great. We’d like to do that super fun.

Okay, well, we have run out of time, today, but I’ve really enjoyed chatting with you, Dave, and learning about Kukuza. And how you guys are helping out the cannabis industry. So where can people find out a little more information about your company, well, the simplest thing is go on our website at www.kukuzaassociates dot com, That’s Kukuza associates all one word. And it can also reach me through that website if they want. And Bethany thank so much for the opportunity to join you today I really enjoyed the conversation.

Absolutely, thank you again for sharing your wisdom and thanks to our listeners for tuning into another episode of NCIA’s cannabis industry voice until next time.