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This week, Brett Gelfand, managing partner of Cannabiz Collects, joins the podcast to discuss the cannabis industry's nationwide problems with paying debts and his efforts to fix them.
Brett Gelfand graduated from the University of Georgia with a finance degree and had a job lined up to jump into a career as a financial consultant. The problem was that he didn't want to work a corporate job.
He was contacted by a friend who was setting up a cannabis business in Colorado, and he became part of the team who launched Colorado Product Services (CPS). CPS built some notable brands, products and facilities, but it was an odd job. Even after he became CEO, it wouldn't be out of the ordinary for him to drive around with $50,000 in cash and four pounds of weed in his car. Around 2017, he was looking to step out on his own and start his own business in the fledgling industry.
He saw an opportunity in pre-roll packaging. Specifically, he noticed a need for packages that could hold more than one pre-roll at a time. At the time, pre-rolls were seen as a one-and-done product packaged in "doob tubes." He founded Paqcase, and in 2018, he created a new mainstay product line, the first child-resistant multipack for pre-rolls. His timing was perfect as the pre-roll market was about to take off.
When he prepared to leave his admitted cushy job as CPS CEO, he looked for other opportunities or needs he could fix in the industry. Even though he was CEO, Gelfand often had to try to collect from customers with delinquent accounts, those not paying their bills. The company was one of the first to offer credit terms to get CPS off the ground. At first, sales went through the roof, and it was exciting, but 90 days later, he realized he didn't have any cash coming in.
Well, Gelfand's dad was a retired commercial collection attorney. Previously, when he thought of a career, the last thing Brett wanted to do was run a collection agency. Still, after his experience at CPS and speaking with his peers, he realized how big of an issue debt collection was in cannabis. In February 2017, he founded Cannabiz Collects, and he takes pride in his work because he's saving businesses and only gets paid when his clients get paid.
Last year, Gelfand also founded the Cannabiz Credit Association, the first cannabis trade credit association and group where companies are reporting accounts receivable data and gaining access to anonymous aggregate data. Until now, Gelfand says the industry has lacked proper credit scoring and reporting data. Gelfand says that now, more than ever, cannabis operators need help collecting money and making better credit decisions.
Jump around:
- How he got into pre-roll packaging. (5:15)
- Why he launched a cannabis debt collection business after getting burned by customers. (6:51)
- The difficulties setting up a new business from scratch. (10:55)
- Why he is driven to help cannabis operators get paid. (14:15)
- How he is saving cannabis businesses. (15:36)
- The cannabis industry's nationwide problems paying its debts. (18:24)
- Founding the Cannabis Credit Association to improve credit scoring and reporting in the cannabis industry. (20:30)
- Improvements in industry debt collection. (25:07)
- Why he pulled his dad out of retirement to run a cannabis debt collection business. (30:26)
- The psychology of debt collection and what works. (37:05)
- Tips to improve internal debt collection efforts. (46:18)
- Problems with being beholden to bad actors in a limited market. (48:44)
- Why operators think they can't sue a cannabis company. (52:00)
- Why dispensaries are the most notorious when it comes to paying the bills. (54:48)
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