Latest / Reframe First / Scott Foster, CEO & Founder at JJ Scott | Building a Cannabis Beverage Brand in a Restricted Market
Transcript
- Oleksij Rak: Hey guys, welcome to another episode of Reframe First. I'm Alexey, host of the podcast and let me welcome our today's guest, Scott Foster, founder and CEO at JJ Scott. So, Scott, it's great having you here. Scott Foster: Thank you for having me on. I appreciate it. Oleksij Rak: Yeah, awesome. Also, thanks a lot for joining. Scott, interesting story is ⁓ I never intended to chat about cannabis on this podcast, but out of 50 episodes, this is the third discussion with people in this industry. So my team found you by searching through travel and marketplace industries. And that's where I actually work also. Scott Foster: Mm-hmm. Oleksij Rak: but still somehow you ended up like in this industry. And I'm really curious to hear about what you built at JJ Scott and why does it matter for you? Why are you here? Scott Foster: Yeah, mean, entrepreneurship, it kind of found me younger at a younger age as a professional baseball player and stuff like that. You kind of like to control your own schedule, even though you have coaches and things of that nature, you're kind of are a sole a sole proprietor. When you play sports, you have to handle yourself. You have to go to the gym. have to do a lot of things on your own and make sure you stay in shape. A lot of it's, you know, responsibility. So I kind of like that control and that autonomy. Fast forward, I, you know, I moved to California about 13 years ago now, was there for 10 years and ⁓ was bartending and doing side hustle jobs, stay afloat, got into sales, liked it. But one of the things that my boss told me was is that you see those people out there, they make my dreams come true. And I was like, well, I'm one of those people. So I'm not doing that. I'll make my own dreams come true. So I started thinking about what I wanted to do with entrepreneurship and I wanted to get into tech, start. Oleksij Rak: you Yep. Scott Foster: And so I worked at a company that had ⁓ medical software. So we had a bunch of engineers around me. There's nothing more awkward than having cold calls on your rookie and you're in middle of an office full of people that are not talking at all. You're just typing and you're just screwing up sales calls left and right. They're just like looking at you like laughing. You're like, this is not fun. So that was my cutting my teeth experience into sales. But I became fond with some of the engineers there. Oleksij Rak: Mm-hmm. Yeah. Scott Foster: We had an idea for an app. I took it to investors and the investors were like, you know, we're in real estate. We don't really care. And I said, well, listen, if I find a real estate technology or software, I'll come to you. Why this is important is those same people who got me into house stay, got me into commercial real estate, and then those very people then got me into cannabis. know, funny how it moves forward. I did find them a product. They did invest. It was housestay.com. Oleksij Rak: Yeah. Scott Foster: I'm still very close with Manu, the CEO there. They're still doing great things at housestay.com. But then those investors also wanted me to join their real estate company. And then from there, we had a cashflow issues with that commercial real estate company. And my partner Al was like, we got to get into cannabis. We got to get in the green rush. And this was like 2017, 18-ish. And it was all the rage. One of our investors had an empty building, not empty building, empty room in his facility. Oleksij Rak: Mm-hmm. Scott Foster: and it was for manufacturing. And so I was like, I don't know what we're to do in there, but there's a space there for us to enter into his building because he's not using a, he's not using a license. He's not using one of his licenses actively. He's just using it as a trim room or something. So we got into there and I asked some consultants and they led me to solventless hash oil extraction. Now, again, as a pro baseball player, I didn't do cannabis. So I had a bunch of red flags up and trollers up, I don't, not into this stuff. As I got to know the plant intimately, Oleksij Rak: Yeah. Scott Foster: as my wife was actually medicated with the plant after a surgery and fell in love with the plant and how it treated her versus the pain meds she was taking. Now I'm not making this any medical advice, this is just a story, but it really opened my eyes like, wow, maybe we got bamboozled a little bit, this is pretty cool plant. Now I think if, and that leads me to like, you know, later on is protecting the plant, but then as we got into the lab and I learned everything about it and. started to fall in love with this attraction. knew that I kind of wanted to do that industry. We had some success. ⁓ The partners brought me on as a consultant. I had a baby, COVID-19 hits, gas prices soar, ⁓ and my dad offers me a proposition to move home to run his carpet cleaning company. It's been in the family for his from his dad and now him and then to me. And I was like, you know. Oleksij Rak: Mm-hmm. Scott Foster: Ohio values sound pretty good for my kids and the hustle is great, but driving all the way from Los Angeles to Atalanto is taking a toll on me. Being away from my kids, taking a toll on me. ⁓ And then, so I just said, you know, think I'm going to, I'm going to take that offer up. So I moved back and when I moved back, Hurricane Ian hit Florida. My parents have homes there. So they lost lot of that. And so they needed the business to repair them. So during that two year period, I'm living at my parents' house. Oleksij Rak: Yeah. Scott Foster: going through like what is going on. I'm not going be able to get this is the life of an entrepreneur. We're not going to be able to get take over the business as early as we thought. So fast forward I read Think and Grow Rich. So if anybody's listening to this book if this is or listening to this one book you should definitely read is Think and Grow Rich by Napoleon Hill and read it as many times you can. If you're ever in a struggle or a pinch. Power positive thinking. When you're going through stuff because in entrepreneurship that is like the one thing you can guarantee is that Oleksij Rak: you Scott Foster: Nothing's gonna happen in the timeline you think. You have to be open-minded and you can't hold on. You gotta be more like a palm tree. When the winds hit, instead of an oak, because if you're an oak and you're sturdy and you're strong and you're stubborn, you're gonna break. So you gotta be able to weather the storms. can't take it all, it's not all on you. You gotta ask how God's given you lessons for you, not to you. Life's not happening to you, it's happening for you. You gotta have that mindset. So as soon as something hits, instead of licking your wounds, which you can a little bit, but not much, you gotta get right back out there and you can't be a poor me. You gotta be like, all right, well, I don't know how this is making sense, but we haven't gone forward yet to make it make sense. Let's see how this works. During that two year period, I found myself again. I went through the adversities in California. I went through the adversities I'm going through currently. And I was like, I can be the victim of my story. I can be the hero of my story. And so I started to read those books and those books taught me one thing was, Oleksij Rak: you Thank Thanks. Scott Foster: something in your life that you are great at or it's really you're really good at and that not many people know how to do it there's a big market for it. So like if you want to get into tech do you understand tech? Are you a coder? No. Right there you're gonna have you don't have a lot of capital behind you at least in the back of the day AI can help you now but there was no AI back then. So maybe you could do some tech with AI now and code yourself and tell AI what you want and it can spit out code which I think is the future. But at the time, it's like I wasn't a coder. Usually coders are the ones that start businesses like that, ⁓ or they have capital. And so for me, I was like, I'm really good at extraction. That's a really rare thing. And so I got into that and I was like, I gotta get back into extraction somehow. Maybe I'll do it in Ohio. Maybe I'll do a cannabis company out here in Ohio. And then ⁓ the next morning I had the idea, said, okay, I wanna be in the sovereignist hash roll extraction. And I had the idea for JJ Scott the beverage. Oleksij Rak: Mm-hmm. Scott Foster: And JJ Scott is this first strain-specific cannabis elixir, 750 ml bottle. It's like a standard-sized liquor bottle of his kind, and it has 100 milligrams in it, and it's made purely from hash rosin, saltless hash oil. And then the JJ represents John Casale and Jason Gelman out of Emerald Triangle, which is like the Napa Valley of cannabis. Oleksij Rak: Mm-hm. Scott Foster: All of those things kind of came to me as we were going through this process. Some guys fell on or came on, some guys fell off. But we can dive into that a little bit later. But that's how we got to JJ Scott and also Tiki Seltzer's. We're a cannabis beverage company. So that's where we got to. I know it's a long-winded story, but that's a little bit of my background. Oleksij Rak: Yeah, that's an interesting one. awesome. So thanks a lot for sharing. You mentioned that you found tech in real estate business. What tech is there in cannabis business nowadays? What room for technology do you see there? Scott Foster: Room for technology, I think it's endless. ⁓ I think education is the number one thing. It's like, right now it's like buying a used car and there's no cars.com or, know, CarGuru or whatever the heck the apps are. I think there needs to be a tremendous amount of, ⁓ definitely a lot of educational pieces. I don't know what it one could be two, just like, There's so much more you can do with the plant. Breaking down the cannabinoids and kind of how they interact with your body. I think you could do, like 23andMe merges with Intelligy, like all this stuff about you. I think there's kind of a situation there. It's like, then you could kind of color code cannabis that fits your color range or whatever you are. So it's like, I'm pink because, or I'm blue because of, you know, the cannabinoid breakdowns my body. So I tend to go more towards this strain or this kind of type of thing. And ⁓ then explain why. that is, right? And explain what cannabinoids do what with your body and how they interact and how they, you know, based on your body type, it might help more with inflation if you go or inflation or inflammation of your body X. I don't know, but there's, there's, there's that. I mean, you could do amazing things with cannabis that you cannot do with alcohol. It seems like, and I'm not just coming at alcohol, but I don't really know any other way to say it. It's poison, you know? There are benefits to cannabis. There's no doubt about it. If you ever have a headache and you need to take, you know, if you're to take a pill, I would prefer, I prefer to take cannabis. That's just my opinion. Like a beverage or something. You know, I'm not an avid smoker. I don't want to smoke. But I think there's a lot of people like that. And I think what you have right now in this world, and this is why I love the beverages, and this is where we're in this intersection of this unique period of time that I think is just absolutely going to boom. And we have all the crazy stuff going on in the world right now. You have, people love cannabis. They love smoking it. Oleksij Rak: . Scott Foster: They love the THC of it, but they don't really, that's the avid users, but the people that want to enter into the space, which is the majority of America, because a lot of us never did cannabis because it was illegal, they're like, I don't want to smoke. I'm not smoking. I'm not smelling. I don't want any that. So this is great. Smoking is great for the avid user, but for the everyday user, they drink. But here's problem with drinking. They drink because they socialize. Most of them like to socialize. They're not drinking to Medicaid. They're drinking to socialize. So they take beers, they go to the pool parties, they go to the, you know, the bar or whatever to socialize. But what if you could take the THC benefits of this, right, and the no smoke, and the no hangover, no guilt, no blackouts over here, and you put them into one thing? Socializing of drinking, THC benefits, no hangovers, none of that stuff over here. I'm not saying there's no side effects, but you drink too much, you're going to get a hangover. Oleksij Rak: Mm-hmm. So. Scott Foster: And so I think that that's where I think JJ Scott and Tiki fit into is this middle part. And then people want to know, well, I don't want to have chemicals in my body. Well, then you don't want resin. Resin infused or hemp right now, beverages, are derived, the THC is derived from a chemical process. There's trace amounts of chemicals in it. If you're using any distillate or any resin. Rosin is ice, water, heat, and pressure. And you're trimming off the plant, you're getting its most organic, purest expression of the plant. Oleksij Rak: . Scott Foster: People want to know that, but they don't know that because they don't understand cannabis because they could just say, hey, THC infusion. You're like, all right. I don't know what that means, but let's try it. It's like they don't know. And they saw that they could buy it online with the hemp bill and loophole. And they're like, ⁓ it's safe. Well, maybe. It might be perfectly fine, but I just think there's a tremendous window of opportunity for educating the consumer. And I think it's my job to kind of go out there Oleksij Rak: Yep. Scott Foster: on podcasts like this or any podcast to kind of explain like, hey, educate yourself on resin and rosin, distillate, all that stuff. Understand the processes of how they're making resin, how they're making your products and understand the difference between, know, ours is full spectrum. That means all the cannabinoids, right? There's isn't. So it's just because they strip. You strip cannabinoids, you strip terps away when you go through a chemical process. Those are just the kind of things you go through. So just like educate yourself, you know, And I'm constantly educating and learning too. So if anything I say is wrong, I mean, just don't hold me accountable for it. We're all learning through this process. Cannabis is a new, it's on the bleeding edge of things every day, every month. A new invention, a new idea is coming to fruition. So we just have to like, it's a really cool time to be in cannabis. I think it's particularly the beverage space I think is the biggest window for cannabis to make sense. It's bridging both gaps. And I think it's creating literally the perfect opportunity for socializing and drinking. Oleksij Rak: Yeah. Scott Foster: having good nights, not bad nights, and having just a lot of fun, as long as you don't overdo it. If you overdo it on cannabis, you're gonna have a rough day, and you're gonna learn real quick that your limits, you don't wanna be overdoing it. And I think a lot of, that might be different with beer or alcohol, oftentimes you feel like, want another one, another one, another one, another one. I've experienced cannabis and said, you know what? I'm good with one. It's just a weird feeling. You just, don't wanna go to that limit with cannabis. You just don't wanna take that ride, because you are conscious to the whole thing. It's not like you're... you ever overdose on cannabis, you're gonna be like, I remember all of that and I don't want any of that again. It's a weird plant like that. at least my personal experience. So yes, technology for, to answer your question again is just technology would be educational pieces. And definitely I think there's tremendous opportunities in manufacturing. I think there's tremendous opportunities in distribution. There's only a few in the game doing it. I think Oleksij Rak: them. Scott Foster: Creative marketing agencies that understand the nuances and the difficulties of the rules and regulations that are being hit by Instagram and Facebook if you're doing THC products, they need to be able to, if you post the wrong post, you're banned. It's a big problem. If you got like 10,000 to 100,000 followers and you post something wrong and they cancel your account, that could be a huge issue. So that kind of stuff, there's just a huge, I mean, just endless. We could talk on here for. Oleksij Rak: Yep. you Scott Foster: how many educational opportunities or how many different technology opportunities there could be in a variety of ways for this. yeah, guys, a little bit. Oleksij Rak: Yeah, that's actually kind of my next question is how do you sell actually in this industry because it's quite stigmatized and it's quite restricted nowadays still. how do you sell your products? Scott Foster: Well, think the biggest, yeah, we talked about that yesterday. I mean, we had a huge conversation yesterday about that with our marketing team. And it's like, how do we get this message out? The story is everything. And if you can't market on your stories, and so it's like, okay, well, we'll enter into competitions, you know, and see if we can get first place on beverage competitions to get our word out. Podcasts, podcasts, great way to do it. Get our word out through podcasts. Oleksij Rak: Yeah. Scott Foster: and not in the cannabis world, different worlds like Joe Rogan's and things of that nature, getting it out there through them because that's how you're going to get to the masses. You're going to get to the people that are independents. If you're talking to cannabis advocates, they already know cannabis. It'd be like Democrats talking to Democrats. Like, I know. They're like, we're already preaching the same choir. You've got to get people that are out in the general public that aren't doing cannabis to go, huh, that's interesting. And then what you're going to do is by doing it through uncommon means, not in cannabis worlds, not in podcasts, not in that stuff. It's important to hit them up, but they're gonna find you out anyways because they go to dispensaries every day and they're gonna have budtenders telling them every day like, hey, we got a new product. They're in there every week, every day, ordering on weed maps and stuff like that. So the only way you're gonna get it out is through educating the masses through, because our true target market is those who drink hemp. they, 76 % of them based on a 2024 study would never go to a dispensary. as long as they can get it through traditional means like, you know, online shopping markets, you know, maybe certain convenience stores, they're never gonna walk their foot into a dispensary unless forced to, which maybe they will be after November, I don't know what happens to that loophole, but I just, how do you get to those people? And if you're not allowed, this is why, you know, maybe I'd lobby for this or try to get somebody to get involved with Facebook or Zuckerberg or whoever, it's like. Oleksij Rak: Yeah. Scott Foster: How is this fair where you pay all these taxes, you pay all these rules, you do, abide by the rules, you go through all the, you know, the different testings you have to go through and everything, all the hurdles for the licenses and pay it just a fortune on these things. And then you're not allowed to market it because they'll ban your account because you put cannabis on there. I mean, when are we going to grow up and get through that? That's so we have, you know, Tiki, this is cool too. Like Tiki, this is an entrepreneurship podcast. So it's like, Oleksij Rak: Mm-hmm. Scott Foster: We went through this process of just, I'll explain this process, maybe this is beneficial to somebody. There's gonna be times you don't know anything. You're gonna feel like an absolute, absolutely lost. When you're doing a business, you're gonna have inventions within inventions within inventions. So you say you have a great idea. You think that's the battle? No, there's gotta be, there is a chain of businesses within your business. Think of it like a machine. And each little mechanism of the machine has to be tailored to what you're doing. And as you go forward, Oleksij Rak: Yep. Okay. Okay. Scott Foster: that part might have to be all switched out for another part. It's called a pivot. Maybe a minor pivot or a big pivot, depending on the market. So as education becomes, you know, greater and you start to learn more about the market, you're like, ⁓ just the other day we're like, we're to do 100 milligram lunch. 100 milligram. Because we don't want to. But the cannabis, we call them the cannoholics, the ones that are avid users, they're buying from dispensaries. The ones that are a target market aren't. They're buying online. Well, Well, you know we got to do? We've got to get cash flow, right? This is a conversation. We've got to get cash flow. Well, how do we do that? Well, we've got to hit, we've got to, unfortunately, we're going to have to go to dispensaries and give them what they want until we figure out a way to get to the masses, you know, and get our lower dosages. And so, we're looking at this room. What are we going to do? And then, you know, our CMO had a great idea of doing four-pack, 25-milligram four-packs. So, you're getting the socializing that you wanted. You're getting four different dosages. Oleksij Rak: There. Scott Foster: You're getting four different 25 milligrams. So you can have four cans now. And you're heading and you're bridging to that. And it's called a beach pack, right? You're doing things. And when you say beach pack, what do you hear? Insubconsciously you're going, I'm going to the beach. It's a call to action without saying it. These are the kinds of things that your story is what gets you, gets people to your product. So yes, you should be 100 % on your product. You should do the best thing you can. Your service or product should be the best it can be. But I'm gonna tell you right now, if you're a service, you might get away with word of mouth marketing, and you might be just fine. Like I can do that with carpet cleaning. We've never marketed once in our life. Our fans, our restaurants that we clean for are the ones that gave people, hey, you gotta talk to Scott Foster. You gotta talk to Donnie. They're great. You gotta have to your carpet. So word of mouth spread for us in the service industry. And if you're a small business, that might just be fine. You wanna spend money on. Oleksij Rak: Mm-hmm. you Scott Foster: because I can understand people don't want to spend money on marketing. They don't know what the results will be. And it's a lot of money. You've got to really, you know, keep your overhead down when you're starting a business. But ⁓ when it comes to a product, your story is everything to get you to, right, to that. So once you get, the story gets out there, I go to your product. Is it available? If it's not available, you just lost a customer right there. They're gonna be very upset. They went through all those hurdles and hoops and listened to all your advertisements and you weren't there. Oleksij Rak: Mm-hmm. Scott Foster: You weren't there for them when they were there for you. Huge no-no. ⁓ Your brand, is it likable? Is it fun? Is it engaging? Does it make you want to look at it? Nike, Tiki. mean, there's J.J. Scott. There's stories behind these things. So you read the story, you get excited, you go, you get the product, now you're going to open it up. As soon as they touch it, smell it, feel it, what are they experiencing empathetically? What are you giving them that no one else has? Oleksij Rak: Yes. Scott Foster: mean, Apple, you touch a box of Apple and you open that thing up and it's, you know, the magnetic close and all, you just feel luxury. It's just amazing. You're like, got what I paid for here. And that's what they've got to feel like. And then they try the product and they fall in love with it. You're not done then. Then you got to follow up and follow through to make sure they love the product. Ask them questions, make them feel like they're a part of the family. And they are. They genuinely are. Make them go, hey, know, shoot them an email, shoot them a blast. Say, hey, did you love this product? What would you feel about it? What do you want us to bring next to market? Oleksij Rak: you Scott Foster: Imagine being a consumer and you check box that you wanted, you know, Paloma di Groni next. And we did it. The confidence that you exude from that, you'll feel like you were a part of the company because you were. You were part of the decision-making process that led us to our next best product, maybe our best product. So it's just like, it's follow-up, follow-through. There's four pillars. Great product, great brand, got to be available and you got to follow up and follow through. And if you do those four things really well, you do great. And if you constantly are going through your chain, product, website, this, just constantly going through all these little chains in the link all the way to complete the circle, then you're not done. You got to go back through them again and again and again and again and keep fixing them all the time. It's a never-ending job. You're never finished with business. It's a 24-hour thing. So unless you want to retire, then sell it. Make your money and walk off. But if your passion wanes, then the company will falter. There's no other way because somebody will come in with more vigor and more aggression and get your chain and once they have your chain as good as you they're gonna better it and you're gonna fall back on the wayside if you don't look at constantly into industry trends, constantly finding niches within the market, constantly trying to benefit the consumer. It's always about the consumer. It's not always about the investors. It's really about the consumer. If you get the wrong investor and it becomes about the investor then the consumers are gonna fail and your business is gonna fail. So you have to find an investor that's aligned with you. Oleksij Rak: Yeah. Scott Foster: and your morals and values and your compass. Not about the money, which it always is about the money, but the money should be following you, you should not be chasing it. If you're doing the right thing, it should be chasing you down and knocking on your door to pay you. People are running to pay you. Take my money. They say that saying, take my money. You're doing great. You don't cater to your investors, you shouldn't. And if you do, kind of selling out, in my opinion. I know you have to, but, you know, show them the progress. Oleksij Rak: Yeah. Scott Foster: and take them along the journey with you so they see it with their own eyes. If you want to do it that way, that's the way we've done it. And I take my partner with me, which is Dale Perez, with me everywhere and he sees everything with his own eyes. I don't need to tell him a thing. I don't need to be like, I don't need a sugar coat of story. He just sees it, right, with his own face. That's another way to do it. So hope that advice is beneficial to anybody. Oleksij Rak: Thanks for sharing because you got to be creative in marketing in your industry and it sounds like you are. What do you think about November? What will change after November? And actually I'm hearing predictions that in two to three years cannabis will be fully legal and the market and logistics will change a lot. So what are your thoughts on that? What are your thoughts on the future of the industry? Scott Foster: Brutally honest? You brutally honest? Oleksij Rak: Yeah. Yep. Scott Foster: I don't know. think alcohol as an industry has got a big dilemma on their hands. I think they pay people a lot of money. I think they do. I think that Washington's got a lot of lobbying money coming in from there. I'm just guessing. So don't quote me or don't hold me accountable for this. But I just have a gut feeling that they're making, cannabis is making the alcohol industry hurt right now. I don't know, I think that the cannabis industry needs to come together as a whole and stop the infighting, if there's any at all. I appreciate hemp for bringing this to market. I mean, there's a $27 billion industry plus or minus right now because of hemp. In a very short period of time, this skyrocketed. I think people are sick of smoking cigarettes. I think people are sick of smoke or drinking and getting drunk and driving and trying to do all that stuff. And just because they want to socialize with people, I think people are more inclined to have a spiritual high kind of a... vibe when they play video games and stay inside and get hammered and not remember their day and feel terrible the next morning. I think all that stuff is coming to a head right now. So we're in a very weird space. ⁓ After people cannot get, if that comes to fruition, where they cannot get hemp, which it sounds like they won't be able to get hemp in their traditional way. They'll probably have to go through dispensaries like all of us because this is intoxicating. ⁓ Then it's going to be us, our THC rosin infused beverages versus their hemp. Oleksij Rak: Mm-hmm. Scott Foster: and I think we'll win every time as long as the education is understood. There's no question. This is a better product. And I think premiumization is big, right now with gas prices going through the roof and people having less money, maybe hemp is the way to go and they'll just stick with their traditional, what they're used to and they're accustomed to. I don't know. But there's a tremendous amount of variables, so predicting this stuff is kind of hard, but I think, I'll ask you this question and let me see what you get. Does an alcohol with a cannabis brand like mine, it creating a beer or alcohol, does that feel weird to you in your stomach? A cannabis brand creating a beer or an alcoholic beverage, does that feel weird to you? Oleksij Rak: Yeah, it feels weird. Scott Foster: Right? But Luganitas and other companies are creating cannabis beverages. Hmm. Your main product is alcohol. So why are you creating a cannabis-infused beverage? So you're going away from your target, but you are and you're confusing your brand because you're afraid of what? Why would you do it? Well, so obviously there's some statistics that are saying that we're cutting into your market share, your margins. ⁓ And so to me it's like, That to me was a no-no. I think that we need to make it very clear that we are not together, we're not in bed. know, alcohol and cannabis, we're not together. You know, we're beverages or whatever, but we're not, we do different things to the body that we don't want to be associated with. And so you're muddying the waters. So I think that should tell you right now where the mindset is of the alcohol industry. And I think if we don't come together and create conglomerates or... powerhouse conglomerates within an organization, organized as a cannabis whole, then you're opening up your door for Philip Morris's and you're opening up Tilray, you're opening up all these doors for alcohol, huge alcohol conglomerates to come in and absorb you and make the rules. So the best way to win this is together and is to unite. And the things that we should be fighting should be black market, black market sales. I mean, three billion black, there was $3 billion in Ohio, $3 billion market. Oleksij Rak: Yep, for sure. Scott Foster: Guess how much ⁓ the legal market got of that $3 billion? $1 billion. So, one third, you know, one third of it, instead of two thirds, was black market still. The government, if you're going to have us all do all this stuff and jump through all these hoops and pay all these ridiculous taxes and all that stuff, you've got to crack down on the black market. It's just that simple. And I just don't know how important that is to politicians right now. I think Oleksij Rak: Yeah. Scott Foster: You're seeing it with, I I think you saw in California with the hemp stuff, but we just, it just has to be a bigger penalty for doing that. Cause you're, you're, you're, cutting into the margins of people that worked their tail off. If you're selling black market, you're not paying taxes. You're, you're, you're going where you want to go when you want to go there. You have complete, you know, you have freedom that we don't have and you can undercut our prices without having an issue at all and keep your margins really high. So it's like that kind of stuff is killing the legal market. So I would say after November, my theory is that hemp will have to go through dispensaries, low dose beverages will be a hit, high dose beverages will still be a hit. There'll be two separate market segments of finally people will start going to dispensaries because they're forced to. The beverage options, you're gonna have to have a lot of beverage options there. Oleksij Rak: Mm-hmm. Mm-hmm. Scott Foster: You want to have brand blocks, like lots of product on a block so you can see, like if you go through Bud Light or Miller when you're walking down a grocery store, you'll see like how many cases. That's a brand block. It looks like a big billboard of just Bud Light. You want to have a lot of skews to be able to accomplish that, I think, or even maybe your own refrigerator full of your stuff. ⁓ I think that ⁓ education will increase hemp will fall off unless they do, they converge into the THC traditional market. Rosin will be the most sought-after beverage once they understand it. That will probably happen maybe end of 2027. I think you'll see that. ⁓ And I think that you'll see a, I think that in regards to technology, being able to deliver to your door and buy online cannabis beverages just like you would. Oleksij Rak: Mm-hmm. Scott Foster: So if I have a JJ Scott website or a Tiki website and they can buy it online and then I have a distribution service that gets that and drops it off at their door within a week or so ⁓ in a legal and compliant way, I think that that will be the way that you'll get the independence and then the traditional will just go to the dispenser or your buy on Weedmaps or whatever. But those are the kinds of technology increases that you're going need to have is through distributional logistics. That will be a massive, you can drop it right off your door. That's clutch. Oleksij Rak: Yes, especially since you will get the ability to go nationwide, to sell nationwide. So you should have a proper... Scott Foster: If they open, see if they, in two to three years, if that happens, you're talking a whole nother game. I mean, you're talking like the industry that I have access to in California and potentially Ohio here, it blows, mean, its scale is where I got to do. Then manufacturing becomes huge. ⁓ Distribution becomes huge. Being able to get the most sought after flour in the Emerald Triangle becomes huge. It would be huge for the United States, it would be huge. At least do beverages. If you start with beverages, everybody's used to drinking. And then you can slowly work your way to blunts and other stuff like that. But open it up, if you want to open it up, open it up for hemp, you know, open it up for THC beverages and let the smoke and all the other stuff be secondary for a while if you want. I that, just, it just, it slowly, slowly bring them into things. I think it would be super easy if you just said, look, let's just deschedule this. Make it just like ⁓ it is with alcohol. Your dispensaries are your liquor store and your- and your liquor store is your liquor store, just keep the, you know, alcohol and weed separate. You go to a dispensary for your weed, you go to a liquor store for your liquor, come in, show your 21, your 21 and over or whatever at purchase and be done with it. I just don't understand why this is such a difficult thing to understand, but in regards to regulation, that should be the easiest part. The hardest part should be figuring out, and I think this is where they're running into challenges, is testing. Hemp was being able to sell however they wanted. I mean, you're buying hemp for like nothing on the dollar. so cheap and just grind that up. Like there's no care really in my opinion about the hemp stuff. ⁓ It was never, that loophole was never meant, that farm bill was never meant for us to do in taxicating hemp products. It was for like you know research, plastics, other stuff. It was not meant for this. ⁓ But yeah I think that, I do think the distribution and stuff like that, that would be, if it goes nationwide, I can't even tell you in my head how much this industry will boom. Oleksij Rak: Thanks. Scott Foster: it will blow the hinges off. It'll become the new alcohol. It'll be huge. yeah, think cigars, champagne, and ⁓ weed beverages will stick around. I don't think the others will have a shot in hell. Oleksij Rak: you Cigars, yeah. I'm a big fan of cigars. Scott Foster: Cannabis cigars and cigars. Cigars are awesome. It is just because it's a niche thing. It's a luxury thing. Champagne, wine, that'll all stay. Wine will be fine. Wine's good. Really good wine. I don't think it's going anywhere. I think the hard liquor stuff, tequila might have a shot, because it's really good. You saw the blow up of tequila. mean, tequila is a great spirit. think it's just... Anyways, think those are the... You're still going to have your drinkers. You're still going have your smokers, but they're going to be... Oleksij Rak: Yep. Scott Foster: you if you see somebody smoking a cigarette in the alley, you're like, why you smoking a cigarette? You know, it's weird. It just feels funny. And if you see somebody smoking like a blunt, you're like, I kind of get that. It's like, I kind of understand that reasoning. you know, I don't know. just think, you know, but, you know, there's a market for everybody. I don't know. It's just not my market. And I, you know, I tailor to who I serve. Oleksij Rak: Yeah, But do you see some generational change? Because the alcohol industry is struggling from generational change. Especially like heavy alcohol and wine either. So the younger generation does not want to drink. Scott Foster: You can feel that, Like, I don't know the numbers for that. I haven't even looked them up. I didn't even look them up. All I needed to see was beer companies making cannabis beverages. I know you're getting hit. I don't know how much, but it's got to be significant for you to go, whoa, we're losing out somebody here. What is the deal? We've lost a fortune. Let's make our own beverage. There you go. Okay. Well, now I know that we're cutting into your margins and you're trying to make it all cool. Like, we're just starting to cool. We're hip with it. No, you're divulging from what you Oleksij Rak: Yeah, that's what happened. Scott Foster: you started doing and you're going into a whole other lane and acting like it's just, you know, ⁓ part of that too. I think the messaging for cannabis too, like we're the founders of Jane. That's what we're calling it. I don't know if we're going to be the people, but we could be like the founders of whiskey. We could be the founders of gin. We could be founders. So we're calling it Jane because right now you have, you have an alcoholic beverage, right? There's categories, right? You have it. I think I call it like an inverse triangle, right? You have it. You have like beverages. than alcoholic beverages. Then you go down and you cut down this triangle and you go, where are we? And that bottom of that triangle, the very, very bottom of the tip, you're like, we are a cannabis beverage. Let's go a little bit more. Okay, you're a cannabis beverage. We're an alcoholic beverage. Are you wine? Are you whiskey? Are you gin? What are you? What category are you in? And if you're a wine, are you a Melbeck? Are you a Pinot Noir? So we need to do the same thing now with It's like we're a cannabis beverage, but are you hemp? Are you resin? Are you rosin? And then you get into, you hybrid? Are you indica? Are you sativa? So there's categories that we need to establish within that space. And again, we need to have a conglomerate, a committee of people sitting down that have made this industry what it is. Like nowadays it's done a great job. There's a few other companies that did a great job. We all need to sit down together and round table and say, look, we are the future. We're the trailblazers of this industry. We are not fighting each other. We need to support each other. If you're doing something like a rosin infused beverage, all the power to you. You did that. That's your lane. How do I support you instead of fighting with you? We don't want to compete over the same. We want to offer different products for different people. So maybe I'm doing a seltzer. Maybe you want to do a cola. Maybe you want to do this. So we're all working. There's enough to go around here. We don't need to have infighting. That's the best way to create division and to screw up this whole thing we're trying to do, which ultimately is to protect the plant. Oleksij Rak: Yeah. Scott Foster: and to protect the people's legacies that sacrifice their life to get us to this point. You know, you see, people were incarcerated for decades to try to preserve the rights to use this plant. They love this plant. We've got to be advocates and we've got to work together. And I think the alcohol industry figured that out. think a few other, probably the cigarette industry too, they figured that out. You've got to have committees. You've got to have groups of people that love the plant. They start with reverence. They're prideful, they're the right kind of pride. They're dedicated to their craft. They're passionate about what they do. They love the plant more than themselves. And they're willing to do what they gotta do to make this plant available for people that desperately, I think, need it. I think this is gonna save people from, I think, it helped me with alcohol a tremendous amount. And I wasn't an alcoholic by any means, but who knows what would have happened if I didn't have this plant? You just don't know. And I can't, I don't wanna foreshadow that I would have done that, but. I think it's reduced my alcohol consumption considerably because I found out there's a better way to do it. It's that simple. Oleksij Rak: Yeah, in terms of like operations that you have, I'm trying to look for what the room for technologies are recent. So what actually breaks the most in your operation and what's the most labor intensive? Maybe you could elaborate on that. Scott Foster: So far the most labor intensive thing has been ⁓ being the CEO you wear a ton of hats. You know I'm designing websites I'm doing you know setting up our social media getting that started right now trying to figure out go-to-market strategies business plans decks pro forma's ⁓ financials raising capital ⁓ and then to me building the platform building the platform of building the engine you know you go okay I want to do a cannabis beverage great who's gonna make it who's gonna formulate it. Oleksij Rak: Yeah. Scott Foster: So I had to find Jeff the 420 Chef, Jeff Danzer, who's an absolute top five cannabis chef in the world. Great, locked him in. There's one piece, there's one chain. Now we've got to see how that works. So on paper it looks good. Now let's see how we play ball together. Are we going to have infighting or are going to have a good run? So far it's been absolutely amazing. So he fits our ethos. One guy that I worked with that taught me everything, I'm not going to mention his name, but it didn't work out. And it's been trials and tribulations with this ever since because he didn't match our energy. He was selfish. So when you have selfish players, you're to have selfish results. And you got to make sure that that could be a potential cancer. You got to nip that right away. Do not out of if you're a young CEO, if you love somebody, but they're not playing ball well with your team, you need to address it and you got to do it quick because that can't it takes one bad egg to scramble an entire company. So you got to make sure you get rid of that quickly. And it's hard. because it might be your friend. And you just got to like bite the bullet and say, this is what the team is asking for. I need to do what's best for the company. And it's not about me. And it's not about my security. It's not about me saving face to this individual. It's about what's best for the company. And if the relationship ends, the relationship ends. It's got to move on. ⁓ Operations there. then you have, know, John and Jason. John and Jason. So how this works, I'm just going to give you the skinny. If you're trying to find, if you're in an industry where need systems, Try to find the best player at one thing and ask them for the other players in the deck that you need. So for example, if I go to, I went to Delta Bev because I needed a manufacturer. I found out they're the number one beverage manufacturer in the entire state of California. So I ask the owner, Shreyas, I go, who else do I need to talk to for sales? Who else do need to talk to for nano emulsification? When you're mixing oil and water, they don't mix, so you have to emulsify them. Who is the best in the game at that? Who is? Who do I need for flower? And you ask each of those people if he goes, ⁓ I don't know about flower. So then I go to Vertosa, who's an emulsifying giant, and I go, who's the best flower? ⁓ you got to talk to My Green Network. And so you start to get the best in the game because the best like to play with the best. And when you get all of those lined up, it's a lot faster pathway than trying to just one off each person. Don't have that pride. Ask for help. Ask who's the best. And then give me the top three. Don't give me the top one. Give me the top three, one to three. Oleksij Rak: Mm-hmm. Scott Foster: in your opinion, and then vet all three and have calls all three and find out which one matches your ethos the best with your company. If you're doing a system like that, that was the hard part. It took a lot of time. I'm simplifying it, but then My Green Network brought me John and Jason, and here's the funny thing. He goes, I said, listen, I want to work with X, Y, and Z. I'm not gonna name the companies. They're the top three cannabis companies in the state of California. And he's like, no, man, you gotta work with these two guys. And I was like, hi, yeah, I hear you, Ken, but I don't know if I want to do that. Oleksij Rak: . Scott Foster: And he goes, dude, you got to work with these three guys. Or these two guys. So I said, he goes, let me send you podcast they were recently on. So I'm cleaning. know, for Foster's Extreme Clean, I'm cleaning carpet stuff. And I'm listening to the podcast in my headphones. And I go, man, these guys sound like they align with what we're, they're grinders, they're emerald triangle. They care, they have so much reverence for what they do and they love, they're passionate. I'm like, God, I love these guys. He's right, Ken's all about, I'm all about this. I come and go, I wonder what their names are. I wonder what their names are. Now I had already established JJ Scott, one of my former partners at Left and Johanna who's on our team. And I was like, I wonder where, I wonder who, what that story is gonna look like. I'm the Scott, but who's gonna be the JJ? And I find out their names are John and Jason. I was like, cultivation, beverage, boom, we got it. That's the story. And so our entire mission became support the triangle, protect the plant. You protect the plant with integrity. doing the right things, treating people how you want to be treated, not cutting corners at any time, quality, quality, quality over quantity, quantity, quantity, doing it every step of the way, even if it hurts, even if you're trying to jump to the market, trying to make sales, then you got a greed bone you got to address. You can't be greedy. You got to do it right every step of the freaking way. It's very difficult. But finding those pieces was very difficult. And now the next phase of difficulty is about to begin and it's constant. Then it's marketing and getting going out there to market. We're pre-market right now. Then sales come in. How do we make sure that we're, say, everybody thinks that demand is a great thing. What if the demand is greater than the supply that I have in my arsenal? I'm going to lose a lot of customer base and credibility, so I got to make sure I scale properly. Demand is not always a good thing if you're not ready for it. It's only ready, it's only a good thing when you're completely ready for it. you have to, that's a whole other learning curve. Oleksij Rak: Mm-hmm. Scott Foster: And then what if there's supply shortages? What if our manufacturer goes down? What if, so I've got to create moats behind those as well while we're playing to ensure that yeah, in a perfect world nothing happens, but there's never a perfect world. So the one thing I know that's constant is change. How do I address change when it happens? And so you raise investment capital maybe after you've proven sales, you build your own infrastructure, try to become as vertically integrated as possible, which simply means you have a bunch of, if you're manufacturing, you're doing it now if you have to. You're distributing if you have to. You're formulating under your own roof if you have to. You're emulsifying under your own roof if you have to. And that way you secure what? The ability to supply the demand and without shortages so that it's all about the consumer. Making sure they get the product when they want how they want it. And if any of those chains of operation go down or maybe my manufacturer gets so busy that I can't get my product manufactured for months. Why not now? What happens? These are all things Oleksij Rak: Hmm. Scott Foster: that keep coming. So every time you pass a test, it's like a child. Every stage of the company, you're like, ⁓ I got my kid figured out. Then he's like, no, you don't. Here's a new thing I'm going to teach you. You're like, ⁓ my gosh, it's never, it's all good, but it's different every stage of the company. And you have to be prepared for those things. So operations is constantly evolving, constantly evolving, constantly changing, you know, and it's just. It's hard, man. It's hard, but it's fun. It's a very rewarding process. Oleksij Rak: Yes, that's what it takes to be an entrepreneur in this world. So yeah, Scott, thanks a lot for sharing this whole story. It was quite inspirational. So it feels like you love this industry and you live this industry. Before we wrap it up, is there anything else you would like to add? Thanks a for sharing. That's a great note to end this episode. Thanks for coming and thanks for sharing all your ideas and all your passion. Yeah, for sure. And have a great day! it.