Sept. 27, 2022

Cannabis Venture Investments with Scott Berman


Cannabis Venture Capital & Consulting. Background in Digital Advertising & Jewelry Manufacturing. Statistician for the Philadelphia 76ers.

https://thepanthergroup.co/

Transcript

Josh Wilson
 Welcome to the deal scout. On today's episode, I get to have a conversation with one of my friends who is an investor in the cannabis industry. And, but he has a really cool background that he brings into the investment world. I wanted to share it with you guys. So Scott, welcome to the deal scout. 


 Scott Berman
 Thanks Josh. It's great to be here. I appreciate. 


 Josh Wilson
 It. Absolutely. All right. So first, where are you located? Where, where would you consider home? 


 Scott Berman
 Philadelphia, PA born and raised, still live near my hometown. 


 Josh Wilson
 Awesome. Awesome. All right. Let's just say I come visit you in Philadelphia and we're going out to a coffee shop and I, and someone comes up and they go, oh, Hey Scott, who are you? And what do you do? How do you typically answer. 


 Scott Berman
 Good questions? These days is an investor and advisor in the cannabis space. I'm heavily involved in a lot of different types of companies, both through the venture fund, two venture funds that I've been a part of. Also now through the Panther group, which is a consulting and advisory firm, that's helping companies grow in the space. 


 Josh Wilson
 Copy that. All right. What we're going to do is we're going to work your way backwards for you always in the investment space. Like, did you grow up doing that? Like, were your parents in it, or did you, do you find yourself evolving into the venture space? 


 Scott Berman
 Definitely evolved into it. I was involved in a startup company in 2008. We raised money and ran the company for 10 years and had a very successful exit. I started to invest my own capital into the cannabis space and about 2017. And, part of the reason I wanted to do it is I wanted to learn how to become a VC actually. I figured, cannabis space was emerging. There was a lot of opportunity. I had of experience with it, but I wanted to really dig in and learn how it works. 


 Josh Wilson
 Got it. In 2008 now anybody, take a look back at history 2008 was a really rough time in the economy, but yet you guys raised money, did a startup and then had a successful exit, like walk us through what that looked like, because there were a lot of challenges in that time. 


 Scott Berman
 Yeah. It's certainly a lot of challenges. The company that we founded was called audience partners and we did political data-driven marketing online. We got involved early on in digital ads for political campaigns and, we, yes, it wasn't a great time for the economy and then the recession and all that, but it was a good time for political advertising, actually, one of the more maybe recession proof, one of the few things. We kind of made a bet that it would continue to grow and, were fortunately right about that. 


 Josh Wilson
 Yeah. You started, in the investment world kind of on the receiving end of, you were started up and you were asking VCs for money and you're asking people for money. Now, people are asking you for money. Let's go though. What did you learn as you were building up, audience partners when it came to pitching and asking for capital? 


 Scott Berman
 Yeah. Well, first of all, I'm very, a lot of gratitude for the people that put money in. That's one thing, like they bet, we were three of us that started the company and they made a bet on us that we had a great idea, people put faith in us. The number one thing, I learned back then was, to first have a good plan, be, really smart and good people and surround yourself with good people and, bringing investors that could be strategic and help you as you grow. That was one thing we did very well early on, was bring on people that, really knew what they were doing in the particular field we ran, but also were supportive in a lot of other ways as went on, there were just good guys. They got along really well with us and they believed in our vision. 


 Josh Wilson
 Yeah. And, and from that, you learned what a strategic investor was and you said that this, that was important to you kind of get through the idea of maybe what a non strategic investor or, in the world of VC there's, smart money and then there's, sometimes dumb money. What kind of explain what you were looking for an investor? 


 Scott Berman
 Yeah. On the one hand, there's friends and family, there's rich uncles and grandparents and things like that. And that monies is fine. It's very nice when you were unable to get it, but on, the strategic investor, like to give you one example, like one of the guys is invested in our political business was a very high up political operatives who had a humongous database. They basically accepted donations for political campaigns. They had a software actually that managed political donations. He had a Rolodex that was unmatched. He became an investor and he started opening tons of doors for us early on, we also were heavily involved in ad tech. We got an ad tech veteran who knew a lot of people in the data world and he was one of our investors. Those guys did a lot more than put money in. They really helped us, just open doors and make good connections. 


 Josh Wilson
 Yeah. Rolodex expertise in strategic advice like, Hey, here's how to actually do what y'all are looking to do. That's, that's super awesome how this is going to be helpful for a lot of us deal makers in the audience too. How do you go about finding a strategic investor? Right. Cause you guys now Panther in the groups that you're working in as a VC, like what should people look for and how did they find an investor that fits those criteria? So. 


 Scott Berman
 I would say the first thing is, try and understand what they're doing in the industry. Okay. That's number one, like knowing that they're there in the industry, they have other investments that are strategic. Definitely what have you done before in this space? Like what your reputation is like, talk to other people, we would talk to people that had it, they've invested in their other companies before. How are they as an investor? Are they supportive? Are they a pain in the butt? Are they, are they cool people? Understanding the personalities, I'm a big fan of breaking bread and having drinks or, sitting down with people in person getting to know them and their family life and their values, their integrity, their reputation in the space. Whereas previous investors, that's one thing also like past success, like how successful have they been in previous investments in their life? 


 Scott Berman
 And that's another good sign. 


 Josh Wilson
 As you're, what we'll do is we'll start on this side of the table and then we'll switch to the other side of the table. Have you ever had conversations where you guys were raising capital and you saw an investor and maybe they're showing up with money, but you're like, I don't know if this would actually be a good idea and you turned down money. Have you ever found yourself in that situation? Right? 


 Scott Berman
 Yeah. Yes. More often than we'd like, look, 


 Josh Wilson
 Did you see when that happened? 


 Scott Berman
 What did I see? Well, first of all, personality, I mean, look, it let's be honest here, Josh. There's a lot of people that have major amounts of money that are not, a little arrogant and tough to deal with and can be very difficult, like, as investors going forward. You sorta project down the road, like, can I live with this person for five, seven years? Are they going to be, difficult to deal with? That's number one, obviously number two is terms, we've gotten plenty of term sheets, I've got, had multiple. I had early on in cannabis. I had a deal where were going to raise money. I was so excited. It was my first big, like commitment for capital. I came into the office and my partner says, have you seen this term seat? It's really not good. And I was like, I was upset. I'm like, wait a second. 


 Scott Berman
 I lined this money up and now, the terms are not acceptable and we had to move on from that one. So, that's something I learned early on is that you could have a great person too, but depending on the terms of the deal, it might not be in your best interests. 


 Josh Wilson
 Yeah. The terms have to make sense. Cause you're going to be married, with them until there's some type of exit event later on other round or IPO or something, you're going to be married to these investors for a long time. So yeah. And also look at the term sheet. Right. See if that makes sense. What, when you built out audience partners and as you were going through the process of raising capital and you said you had a nice exit, what are you allowed to share with us about the exit process from, Hey, I have an idea I started to now an exit and what did that look like? Just share as much as you're able to. 


 Scott Berman
 Sure. I think the first thing is we positioned the company several years in advance for the exit. One of the ways was acquiring another company that had a technology that we knew would be, we thought it would be very valuable in the future. We bolted that onto what we had built that increased our value. That also diluted our shares by the way. In the beginning it's like, wait, we're diluting ourselves, but we're going to be worth twice as much down the road. So that was really key. That happened maybe three or four years before we had the exit. We kind of, position ourselves in that part of it. The other thing was that we ended up with competing offers. We ended up positioning ourselves where more than one company wanted to buy us. That was really key to the eventual success. 


 Josh Wilson
 Yeah. How did you do that? How did you get it? Like, did you just go to the marketplace and say, Hey everybody, this thing's for sale, but how, how did you, how'd you get that thing going? 


 Scott Berman
 Oh, it was more nuanced. And, and it was some of them were our customers actually. We had been doing business, and some of these people were starting to become big customers of ours and they, we realized that the more that they relied on us to do what we're doing, the more, it would make sense for them to acquire us. You know? Having more than one, I mean, eventually we did eventually get a, have a banker involved and so we bought, but at that point we had a lot of people knew who were and what we'd been doing. So, there was definitely mutual partner, multiple parties that were interested in us. 


 Josh Wilson
 Copy that. Yeah. All right. You had an exit around what year was your exit? 


 Scott Berman
 2017. 


 Josh Wilson
 Okay, awesome. After the exit, you're a fairly young guy, what it was, what was the day you're welcome. What was day after exit for you? What was going on in your mind? What was going on in the family? What was going on, in your life? 


 Scott Berman
 Yeah. What, Josh, ironically, there was a major health situation going on in my life too at the time. 


 Josh Wilson
 Okay. 


 Scott Berman
 Have you and I have never really talked about, but I, so it was a very interesting and weird time for myself. I have a heart condition and I actually had open heart surgery two weeks after the exit. Believe it or not. Really when you asked what happened, it was a very weird and interesting time I had had born with heart ailment and I had to get it fixed. And so it just so happened. It was just like, same time. I was sick actually, when this happened and I was really grateful to be alive and I still am today. And, but I was also just like, wow, we're having this exit, which we worked 10 years to do. I'm sitting in the hospital actually when it happened right afterwards. Yeah. 


 Josh Wilson
 You're sitting in the hospital while in exits going around now I think this helps put, deals and money into perspective when you're facing like, Hey, I'm about to get open-heart surgery. There's some risk associated with that. What, how did you view money in business when you were getting ready to get cut open? 


 Scott Berman
 It's an excellent question, man. It really is. It was a, I won't say it didn't mean anything. Of course the money meant a lot, but nothing meant more than surviving, a difficult operation. It really put a lot in perspective, for me and my family and it just, it was a major life lesson. I don't know why that happened at around the same time, but there was some major lesson involved with that, it doesn't matter how much money you have if your heart's not beating. Right. It was a very humbling experience. And I approached it with mindfulness. It's a big part of what, how I do. Like just happy to be in the moment and be healthy. Really. 


 Josh Wilson
 Yeah. I really appreciate you talking about the personal side of the things that are going on in lives because behind every deal maker, there's a story and there's things that we learn. The goal of this show is to put deals in deal makers together, but also to pass on wisdom and advice and these things to other entrepreneurs, right. As you're, as you're talking to other entrepreneurs now you're on the side of the VC, thank God you're well, and all things worked out for you cause I really enjoy our relationship, but now you get to work with entrepreneurs and you're investing in people, but do you have a different perspective than a lot of investors have because you built, you've raised money, built a business, sold the business now invest in business. You have a breadth of knowledge and experience, but let's start on the personal side when you're sitting across from an entrepreneur and you're about to slide them a big check and you can get them some personal advice. 


 Josh Wilson
 What personal advice do you slide over with the check? 


 Scott Berman
 Yeah, so I, definitely the experience of being on the other side was, is huge in that situation. Like I mentioned, gratitude, which I'll mentioned many times, but like the fact that someone bet on us in those days was really awesome. And I was very grateful for it. Now like I'm in a position to say to someone, okay, we believe in your vision. You know, we're going to support you. I understand what that means to someone else. And, and I don't take that lightly, and certainly, the money is obviously the main thing, sliding the check across, but the fact that we're going to be with you and we're going to help you with this journey, the one thing about us, which I feel proud of is like, we are strategic investors. We are not dumb money. Hopefully most people would agree, but like we're not the type of people to put a check in and then say, let us know how it's going in a year. 


 Scott Berman
 You know, we're there, we're supportive. We're going to be there to help you and advise with you and help you get to that next level. Just, letting them know that we're there for all the other things after the check comes in, I think is really important for entrepreneurs. 


 Josh Wilson
 Yeah. So 2008, let's go back into that. So, standing behind you, I see a really cool statue of a well-known athlete. Could you share us, for people who might just be listening and they're like, okay, I can't see that Josh obviously, but kind of describe what you have on the shelf behind you and why is that important to you? 


 Scott Berman
 Well, it says it's will Chamberlain and he many people know he scored 100 points in a game in 1962 and he was holding up a piece of paper that said a hundred, it's a very famous photo of wealth. I'm a, I've been a part of the NBA for my entire life basically. My father was at that game and my good buddy wrote that hundred on the piece of paper, the guy I learned my job from, with the Sixers. So, NBA basketball and the Sixers are part of my life really. A will was a good guy too. I met him a few times and he was a pretty amazing human. 


 Josh Wilson
 Okay. So, all right. Th this is something that we, we definitely need to peel back, talk to us about what work did you do in the NBA, obviously? I mean, did you play basketball yourself or were you on the business side? Like, 


 Scott Berman
 No, I, I tried to play basketball and got cut from my high school team, but that's another story, but I played pickup all on Philly here, but no. Basically my father was the 24 second shot clock timer for the Sixers starting in the late fifties, early sixties. When I was born, I, I was born into it almost. I, when I was a young child, I used to go to the games with my dad and I used to keep score for fun. My dad would give me a program and a pen, and I would keep the points for all the players. And I just really enjoyed it. When I graduated college in 1988, they said, you want to work. I'm like, you're going to pay me to do this. Okay. I started working for the Sixers then 35 years ago, and I keep stats at every home game, basically. 


 Josh Wilson
 No kidding. You actually got to work in stats and data and taking a look at things from the analytical point of view into NBA. What did you learn doing that? Right. Because you're betting on essentially like how people are playing and you're tracking their progress. What did you learn there that makes you a good investor over here? 


 Scott Berman
 Good question, man. Well, first of all, and it also led to advertising too. There's a lot of things now that I look back on it, there's a lot of things I learned from basketball. One is certainly recording numbers sent, first part, like, writing things, writing numbers down and keeping track. That's really important from an investor as an advertiser, as a basketball statistician, you gotta know how to write things down and keep track of what's happening. Okay. The second part is really analyzing the numbers, looking at percentages and looking at growth over time and trends and runs and things like that. And individuals, but also teams. The one thing that was very cool early on like basketball field goal percentage. When I started learning to do digital marketing, I got into Google AdWords and I realized that a click through rate in ad words was the same as a field goal, percentage and basketball. 


 Scott Berman
 And, and it was like a light bulb went off in my head. I'm like, I think I could do ad words because I've been doing basketball stats for 20 years and it's not a whole lot different. I got started to trend into digital marketing, I realized that I already knew a lot about how to collect and the numbers and then tell a story. Part of this, and this goes to investor too, is like looking at the numbers and really understanding the story of what's going on. I like it when that's the same in a basketball game or an ongoing business. 


 Josh Wilson
 Yeah. How do you go from MBA to entrepreneur founder? Now, and we'll get into the VC world. Like how did you go from NBA to that? 


 Scott Berman
 Well, I'm not as young as you think Josh actually, and I had another career in between there. I actually was in the jewelry manufacturing business for a long time. When I first got out of college, I and my dad had a jewelry shop in Philadelphia and we made jewelry. That was my thing, right after college, the Sixers I've done all along, but I did jewelry as my main, thing. I became an entrepreneur in the jewelry business, and I learned a lot about that over those years. Over time, I tried to figure out, the internet started coming about and I started figuring out how to put a website up and learned ad words to sell jewelry. That was kind of the transition that got me into advertising. I started doing ad words for a bunch of other people, and eventually that led into politics in oh eight. 


 Josh Wilson
 Got it. Okay. I understand. How old are you? Are you allowed to say how old you are? 


 Scott Berman
 55. 


 Josh Wilson
 All. 


 Scott Berman
 Happy to be here. 


 Josh Wilson
 Yeah, man. Happy to have you, so, all right. Now you had an exit, you had open heart surgery, two weeks later, you started to get healthy again, you got back on the, when did you decide to go? All right. I want to get back in the game. I want to get back into the business, and or did you have the ability, like with your exit where you could have been like peace, I'm buying a sailboat and I'm outta here? Like what was, what was going through your mind after that? 


 Scott Berman
 It's a, it was a really interesting time. What happened prior to the exit was I had gotten involved in cannabis through the advertising business. So we had done political ads. I got involved in marijuana politics in 2014, actually. I started to do advertising in the cannabis space . I started to go to the trade shows and I was very enamored with what was going on. I had a feeling that 2016, each two years in the midterms elections, things would change and things would move forward. I had a good idea that in 2016, California, wouldn't go to legal cannabis and things would go. I started a business in cannabis while I was at the other company. We had a startup in California and it was just like an offshoot. We spun it out of our ad business. In 2017, when we had the exit, I was like, all right, now it's time for me to completely just go full speed ahead into the cannabis space. 


 Scott Berman
 I was able to invest my, some of my own funds into the venture fund and really start to become like heavily involved. And, honestly, after 10 years in politics, I was ready to move on. You're. 


 Josh Wilson
 Done. Huh? 


 Scott Berman
 I kind of was, I was like, what? Cannabis looks better than politics right now. 


 Josh Wilson
 You were kind of going, I've made some investments while you were building a business, you did another startup. That's really in your blood, it's in your, it's in your heart to build things, to be an entrepreneur. And, and to do this, as you're going through your career and your journey, and even looking in the future, like what keeps you going and what is, how do you're winning? Like what keeps you going and how do you're winning? 


 Scott Berman
 Well, I, it's an interesting thought. I mean, first of all, it keeps me going is, the excitement and the, where we're at in this cannabis space and the idea that we can invest in companies and they can grow and, it'd be profitable. Like that's, certainly winning is exits. Okay. That's one measure of winning is having companies that exit and having liquidity of some kind, that's one thing, but also just watching the space grow, like now that I've been in part of this for eight years, I've seen a lot of things happen and that I kind of thought would happen. Like, I, I made a bet that this business would expand and that these companies would become more valuable. That's the exciting part is seeing that happen. Like, and seeing legalization spread across the country and seeing jobs being created and people getting out of jail and, all that stuff is happening that we thought would happen. 


 Scott Berman
 And so that's really exciting to me. 


 Josh Wilson
 Yeah. All right. So now we're on the VC side. You were running a company, built, sold it, raise some money, build another company that got you into the cannabis industry, made some investments as an LP, right into a fund. What was the experience of, what did that feel like? Because you were building and doing your own stuff, but now you had an opportunity to be an investor taking some of your own money hard-earned money and going as an LP, what was going through your brain? What fears did you have because it's a different mindset, entrepreneur and investor, what was going on in your world? 


 Scott Berman
 Well, the one main thing was learning. I love learning and educating and learning about different businesses and like what they're doing. Like I looked at every pitch stack. I still look at tons of pitch decks because I really want to understand every angle. I mean, we've invested as a group in like 20 different sectors of the cannabis space. Like just understanding all the different angles in and where there might be success, definitely looking at each team and who's running these companies to decide whether they're worth betting on, bet on the jockey, not the horse. It's not always the case, but it's definitely something that I learned early on, pick the right people to bet on. And, like some of the fears that went into it where, I didn't know enough about some of those companies, like looking back on some of these things, I probably would have been maybe more careful in the beginning, I was excited to get into the space and the very beginning and like, so I think somewhat, some of that's things I've learned over time, but generally just trying to just understand that the bigger picture of what's happening in the world and how these each company would fit in. 


 Josh Wilson
 All right. Now going from LP, now, your GP right now, you're in the fund, helping with the companies making direct investments. What was the difference there from LP to GP? I love that. I love having a conversation with you because you've hit so many different sides of the entrepreneurial growth process. Like w what is the difference there that you're experiencing from LP to GP? 


 Scott Berman
 Yeah. Well, firstly, certainly the responsibility goes way up, we're taking people's money. We have a lot of investors in our funds and we're, they're trusting us to make good decisions. Certainly, it's certainly not just about me anymore. It's about all the other investors too. How do we make smart decisions now? It's also, it's also really cool to be in a position to say to someone we're investing in your company, we're writing you a check. It's like a sense of like giving something to somebody. And it's not all my money. I, but that's the responsibility part, but it's also like, cool. It's like, Hey, we're you ask us for money. We're going to give it to you now. It's, but I also feel, responsible for also helping them, like I said earlier, like in every other aspect of, the business, like we're not just giving you money, we're going to help you succeed in this world. 


 Scott Berman
 I feel that added responsibility of being supportive to whoever we're investing in. 


 Josh Wilson
 Yeah. So, and sit in there with a potential investor into now your all's fund. What fund number are you guys on now? 


 Scott Berman
 For the team, this is our third fund. I've been involved in the last two. Okay. The Panther microphone. The last one was the Panther opportunity fund. One of my partners started an early stage fund in 2014. As a group, this will be our third fund, but I've been in the last two. 


 Josh Wilson
 Got it. Now being a part of this fund, you get to sit with other potential investors and you're having a conversation and you could go, listen, I've been entrepreneur built it, raise capital, sold. It I've been an investor into a fund, and now I help run a fund. What questions does an LP potential investor, limited partner have for you that they typically ask? What questions do you see come up. 


 Scott Berman
 The biggest question. It's a very good question is how did your other fund perform? Right? Like, and so I think that's a really crucial thing when you're raising successive funds is like, how did, what kind of returns did you get on your other fund then? How are the companies doing? Like what companies did you invest in? The one thing that we talk a lot is we put out there, like all the companies we've invested in and S so people that do their homework on Panther, understand that we've been heavily involved in this space for a long time. We have a lot of good companies, but, it's also still early in this particular space. It's not like tech ad tech, where we can point back to, a billion dollar exits and say, give us more money. We're not at that stage yet. I would say that's the number one question. 


 Josh Wilson
 Yeah. From your investment career, as an LP, what are some of the successes that you guys have had? What can you share in terms of maybe number of portfolio companies or businesses or opportunities that you've invested in? What kind of returns have you hit in the past? Like, what are you able to share here? 


 Scott Berman
 I can share a little, we've had a couple of exits from the second fund. One company went public. One company was acquired. There's about three companies that are having a very big valuation compared to where we invested. That's not public, but it's on paper. It looks really good. So, we're feel really happy that feel confident that they will have a good exit. At some point, the one company that I started in California had an exit in about 17 or 18, I think. So that was good. And, other than that, we're still just chugging along with a lot of them. 


 Josh Wilson
 Super cool. So, as you're doing this, you've hit many different sides of entrepreneurship. What has been like one of your favorite spaces or favorite places in a business or a part of the journey? What has been one of your favorite memories? 


 Scott Berman
 Just so just the journey itself, like the investments, I think that getting to know the people involved and becoming friends with them and watching them really grow their companies, that's really fun. Certainly the one exit where there was an acquisition was really cool, getting that news, it was awesome. Just like, just seeing the evolution of what's happening with these people over time is really exciting. 


 Josh Wilson
 Yeah. So now let's go back to GP. I'm pitching a deal to you guys. What are some of the, your deal criteria that you guys look for before you write a check? 


 Scott Berman
 Certainly traction, you know, is really important. We don't really love pre-revenue deals as much. We'd like to see some proof of concept, some customer acquisition. You have a lot of customers they're continuing to pay your sales are increasing your profitability, or your burn is getting smaller. Profitability is getting larger, you're executing on your vision. I think, I believe time is the great equalizer, Josh. It's like you say, you're going to do X amount. Okay. Like in the year, let's look back. How did you do compared to what you said, and how has your company like, changed with the difficult circumstances that may be going on? How have you dealt with rough times? How have you built your team? This is a big part of it because every, most of these companies are small ish. So we look for expansion. Like we put capital in, then there's a new CFO and then there's new salespeople and new territories and things like that. 


 Scott Berman
 Looking at those metrics are really important over time. 


 Josh Wilson
 Yeah. Awesome. Yeah. You're asking, like, when you say you bet on the jockey, right. You're, you're betting on the people and you're saying like, how have you built your team and how have you overcome hard times? Right. What about with someone who maybe doesn't have a team who's a solo preneur, or maybe who D who has never gone through hard times? Like what kind of questions do you look at there? Because they don't have the track record yet? 


 Scott Berman
 Well, one of the things that I left out in the last answer is having a track record is super important to us. If we don't really love, we don't invest in too many people like that haven't done it before that haven't done something. Certainly one of the questions is what did you do before this space? Now not many people have been in cannabis that long. So everyone is alive. That's, what's fun about it too. Like people are coming from all different angles. Like, for example, there's some guys that are creating tech platforms in cannabis that created a successful tech platform and something else. Now they're, using the same engineers and skill sets to do something in this space. So that's really important. It's not great when they do a solo person that doesn't have a team or a plan. We shy away from those types of deals. 


 Josh Wilson
 Yeah. So it's a really niche community. Right. You guys have been in it for a long time. What have you, what have you found? It something that brings you all together? Like what is the excitement about the industry and why are people so passionate about it? 


 Scott Berman
 Well, I think first of all, most of us in space realize that we're still in the early stages and we're growing really rapidly, 30 to 40% a year. Sometimes people would predict it's, there's not many industries in this country right now that are growing at the rate of cannabis. That's number one, number two, I come back to politics a lot. If you look back, the politics of cannabis have changed dramatically in the last 25 years, California in 1996, legalized medical cannabis. A lot of nothing happened for awhile. If you look at the last, say, seven, eight years since I've been involved, there's now 38 different states that have medical programs. There's 19 that have adult use. There's a humongous part of the population now that has access to either medical or adult. We see that and we say, what? This space is just, is growing rapidly and has a lot more room to grow. 


 Scott Berman
 And, and most of us have this vision where eventually it will be legal everywhere, federally legal, and there'll be a lot more money involved. 


 Josh Wilson
 Yeah. What do your kids think you do on a day to day basis? 


 Scott Berman
 Oh, they know everything I do. They do. Yeah. No. It's like, and part of it is I did get involved through politics and they, I told them early on, like, I'm interested in cannabis politics and things are changing, and the, the scent, the mentality of younger folks, my kids are in their twenties. They understand that pot being illegal is a dumb idea. Right. It took us our generation a long time to finally admit that it was really not sensible. They understand compared to alcohol and pills and cigarettes and everything like that cannabis is safe for them. All of them cannabis is a medicine for many people. And so it doesn't make sense. It's like the analogy I had is when you first learned in school, that alcohol was illegal until 1930 something in this country and prohibition, all that. I'm like, boy, that was stupid. 


 Scott Berman
 Like everybody drinks, there's beer commercials everywhere. Like that. That was a dumb thing that we fixed in the thirties. We're sitting in 2022, and we're still talking about legalizing cannabis. I think that the kids understand that it's not a big deal. They also understand that the way I got into it, I'm not, what I mean? I'm not illegally growing weed in my basement. I'm investing in companies, I'm an entrepreneur and I'm into the political thing. So that was the explanation. 


 Josh Wilson
 That's awesome, man. As you're, as you guys are building out, you say fund number three or four. 


 Scott Berman
 Is three. 


 Josh Wilson
 Okay. You guys are building out, fund number three, and we'll give you a chance to, give a shout out at the end. If people want to connect with you, talk business, talk, cannabis, talk, politics, talk potential investments, right? We'll give you a chance better when it comes to what you guys are building with fund number three, what's like, what's something that you guys are really focused on now and the opportunity that you think a lot of people are missing. You're like, I wish people would pay attention to this here. 


 Scott Berman
 Well, one thing about our funds is that we have a lot of diversity in terms of the types of deals that we're involved in. So we study every sector. We invest in like, technology and lab test thing and packaging, and also growers and retailers and brands. I think that, looking at the big picture of the different angles is really important, but also potential like exits opportunities. The third fund is actually focused more on later stage companies that have a couple of million, at least in revenue that we feel are closer to an acquisition. Then, the early funds were super early startups, but now we're focused on things that we think in the next couple of years we'll have a good event. 


 Josh Wilson
 Got it. 


 Scott Berman
 Let me add one other thing, Josh. Sorry. The other thing is, the other thing is geography is really important too, as the, as the country starts to legalize state by state, understanding where different markets that are going to be interesting is something that people miss. A lot of people focus on California, rightfully so there's over 30 million people there, but there's a lot of business being done in Missouri. We have a deal there, Arkansas, Michigan, Illinois, and then soon, right? Very soon we have New York, New Jersey, Connecticut. There's a ton of opportunity out here. And then it's super early. It's like the first or second inning on the east coast. I think that's something we're trying to focus investors on. 


 Josh Wilson
 Got it. As you're doing this, I'm building this out. You guys have also, and we're working with you guys on this. You guys are building a, a podcast show yourself, kind of cast some vision on, why you're doing that. What are your, where would you like to see your own podcast show go? 


 Scott Berman
 Well, first of all, Josh, I'm very grateful for your help. You've taught me a lot about it and you definitely coaching us and helping us a lot. So thank you very much for that. I think it's, we have a lot to say, we have a lot of knowledge. We have a lot of exposure in the industry. We love to educate investors. The there's, we've been in it and were comfortable with it, but a lot of people are like still like, oh, I'm not sure about cannabis. Like what's going on. They're not following it like we are every day. Part of the podcast thing is like, we wanna tell people what's happening and why we think it's an interesting investment opportunity. We want to give that vision of where we think the space is going into, including like the geography that I just mentioned, like things are expanding. 


 Scott Berman
 The total addressable market is exploding really, month by month, there's new stores in lots of places. There's new businesses being licensed in lots of places. We want to just get that word out there and have people like get ahead of it. One other thing that I feel is like, it's still a really good time to invest. Like imagine if you invested in ad tech like 15 years ago, in the early days of Facebook and Twitter and Google. Right. I believe that's the message we want to put out there with the podcast. Finally, we have a lot of interesting people that we've within our, in our world that I think would be really interesting for other audiences listen to. 


 Josh Wilson
 Yeah. Super cool. Where could people go to connect with you and have a conversation with you about maybe politics, the podcast, maybe the fun that you guys are building. What's a good place to connect with Scott? 


 Scott Berman
 Well, LinkedIn is great. I'm easy to find on LinkedIn Instagram for sure. Twitter too, but the website is the Panther group.com. You can find them Panther group in lots of places. We have a newsletter for me personally, I'd say LinkedIn is probably the best spot. I, I love meeting new people and talking to people about all this stuff, ? I'm pretty approachable, I think most of the time and maybe too much, but I really like, making and building relationships a lot. 


 Josh Wilson
 Very cool. We'll put your contact information in the show notes, your LinkedIn and the Panther group.ceo. We'll put that in the show notes, as people are running around or driving or something, they could always just go back and then connect with you directly. During this interview, I probably should have asked a series of questions or a specific question that I was supposed to, and I completely screwed up and did not. What questions should I have asked you? 


 Scott Berman
 Oh man, you've got, you're so good at asking questions. I don't know. I guess, I don't know, where, where, what sectors we find our most interesting now. 


 Josh Wilson
 Please. 


 Scott Berman
 No, that's one thing, like we love the ancillary side of the business. We love, we actually really like companies that can move in and into other sectors other than cannabis, like if they have something that they can sell to us, someone else like in an, in a different industry, that's one thing, but also like, understanding, the stage of where companies at and getting involved, like in the sector meeting, like, so, investing in a grower like right before, they're legalization, adult use kicks in, so I think the timing and the sector selection is really important. 


 Josh Wilson
 Awesome. As you guys are doing that, what have you found? What are some key indicators to know that a sector or a geographic location may go legalization, a medical or even adult use? Like, what are some things that you guys look out? Cause you're the guy who's tracking everything, the data, the analytics, you guys have your finger on the pulse politically, just get us some insights on what do you look for that other people are missing out on? 


 Scott Berman
 I think one thing that we've done very well is study the existing, the markets that are first really spending a lot of time there. The first place I went was Denver, Colorado in 2014. Cause they adult use a pass there. I was like, okay, well, and I was blown away. I'm like, wow, like this is going. A couple years later I started going to California and Oregon and Washington. I started studying what parts of the business were evolving at what velocity. In the early days, let's say growers did really well, but over time, the price of cannabis went down. In the early days, the technology, the point of sale platforms were really important as the dispensary's started to grow. It became a lot more competitive. Looking at the evolution of each market, the competitive balance, there's a thousand brands in California now, so that's a data point. 


 Scott Berman
 There's probably 25 brands in New Jersey at this point. You know, that's a big difference. We, but we do see those other markets evolving in a similar fashion as the existing markets. Really pulling in that data and understanding what sectors growing. I'll give you another one lab testing is mandated and regulated in every state. Because there's in developing states, there's not a lot of cannabis being grown. There's not a lot of lab testing needed, but over time, the east coast lab testing is a good sector to be in because there's going to be hundreds and hundreds of growers now, and processors that are going to need to get their stuff tracked and tested. And those labs don't exist today. So things like that are super important. 


 Josh Wilson
 Awesome. Awesome. Awesome. Awesome. Scott really appreciate you coming on the show, sharing your story and hearing some things that I didn't know about you. I love doing these things cause I get to know you and so does the audience. Once again for the audience, if you want to connect with Scott, you guys can head on over to the Panther group.co connect with them there, but also his LinkedIn. He said, that's a great place to ping him and connect and talk cannabis as a whole investments and podcasting. If you're interested in maybe being on their show, that's a good place to start out that conversation as well. Any final thoughts before we close and let me, let me, let me set it up this way. Maybe Scott is, you've had a situation where you've had to learn to look at business from a different point of view, because you said w what does money or business? 


 Josh Wilson
 What's it matter if your heart's not beating? I think that there's something there that I want to maybe present to the audience too. And, sometimes I run an audible, it pops into my head and I need to ask it, if you could pass on a piece of wisdom that you captured from that moment in a hospital bed, to us investors and entrepreneurs and people who are hard drivers, like what does that one last final thought? 


 Scott Berman
 Yeah. Thank you for that question. I mean, certainly health is, and is more important than anything else. If you don't have your health, it doesn't matter. And a lot of us work really hard, but balance is really important. Having perspective, having time with family and friends, exercise, mental health. I, I do a lot to keep my mental strength strong, and things like that. And, like businesses up and down, it's not easy. There's a lot of tough, difficult times, but it's as difficult as they are. They're not as difficult as, being in a health situation. So, if you have your health, then everything else will take care of itself and, try and live in the moment. I'm a big fan of mindfulness and I'm try. I, even though I do it, I try not to worry about the future as much and try and take care of the present moment. 


 Josh Wilson
 That's super cool. I appreciate you sharing that fellow dealmakers in the audience as always reach out to our guests and say, thanks for being on the show, their contact information will be in the show notes. Connect with them and find a way to do a deal with them. That's the purpose and mission of the show is to connect deals and deal makers together. Now, if you're working on a deal out there and you'd like to come talk about it here on the deal scout, head on over to the deal, scout.com, fill out a quick form and maybe we'll get you on the show next until then talk to you all on the next episode. See everybody.

Scott Berman Profile Photo

Scott Berman

President

Cannabis Venture Capital & Consulting. Background in Digital Advertising & Jewelry Manufacturing. Statistician for the Philadelphia 76ers.