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In the first episode of The Equity Crowdfunding Report, Nick reviews the markets and crowdfunding news as well as interviews CEO of Franny's Farmacy and Distribution, Jeff Tacy. Check out the episode, below!
Highlights include data on market closes, including Reg-A and Reg-CF raises, as well as an update from Andrew Dix, from Crowdfund Insider.
See Company Profile - Franny's Distribution
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Jeff Tacy Interview Transcript:
[00:10:51] So let's bring on Jeff Tacy, CEO of Franny's Distribution Inc.
Host: Nick: [00:10:56] And leader of the rest of the Franny's family of hemp companies. Jeff, thanks for being on the show today.
Guest: Jeff Tacy: [00:11:02] Hey, Nick, good to see you, man. Thanks for having me.
Host: Nick: [00:11:05] Cool. So we're gonna start with a quick review of the company. The company has an oversubscribed REG CF on the StartEngine platform. You guys are in the hemp farming, CBD, product manufacturing, as well as retail, wholesale and CBD distribution arenas. You have built a vertically integrated hemp company that also includes lots of education and agri-tourism on your farm near Asheville, North Carolina. And your wife Franny was the first woman farmer to legally grow hemp in the state of North Carolina. It's a lot of accomplishments. I think we should get started with a focus on the farming. How did this farm get started and why did your family start growing him?
Guest: Jeff Tacy: [00:11:53] Well, you know, it was about 7 years ago and you know, the country was starting to see food movement. You know, we're getting away from industrialized farming. And, you know, we just want to get back on the land. And we had backgrounds in farming.
Guest: Jeff Tacy: [00:12:05] So, you know, we bought us an 18 acre parcel and went out and started building our farm. And from there, we started to, you know, incorporate some agritourism aspects to the farm or we built some lodging and allowed visitation and did events like weddings and birthday parties and corporate events. And it's been very popular. We're averaging five to seven thousand visitors a year.
Host: Nick: [00:12:30] The farm obviously has kind of evolved from that part of it to including this hemp growing. Talk a little bit about that and how much hemp you guys are actually growing and how that got started.
Guest: Jeff Tacy: [00:12:46] Yeah. You know, so in 2017 was when North Carolina launched its pilot program and made it legal for us to be able to grow at all.
Guest: Jeff Tacy: [00:12:55] So the first year we grew for fiber just totally as an experiment. You know, we just wanted to see if this was a crop that would grow good in our climate and our soils. And we figured out that it was. So then in 2018, you know, we were trying to figure out if CBD was going to be a thing. So we went ahead and grew for CBD. And the first year we grew, we grew about, you know, maybe twelve hundred plants on about a half acre. And that was actually the plant material that we used to start the rest of our businesses through like the dispensaries and all that.
Host: Nick: [00:13:30] So can you give us a little bit of context just on the big picture? You know, for the people who might not know, how big is the current market domestically?
Host: Nick: [00:13:43] And what do you think its true potential is?
Guest: Jeff Tacy: [00:13:47] Well, I mean, that's one of the exciting parts about the CBD and cannabis industry throughout the US is there's still only a smaller portion of the whole population that's even using CBD or cannabis. So when you look at what the potential growth is of this industry, it's almost unlimited. And I feel like, you know, we're we're very, very fortunate that we got and when we did, we were able to get ourselves established. And, you know, our branding starts from when we had the farm. So when we had the CBD come along and, you know, we were able to put together our brand and our branded products. We immediately had a customer base built in. So, you know, we started local. We've gone regional. We're now going national. And, you know, our businesses are growing every single day.
Host: Nick: [00:14:32] Obviously, there's a lot of market shale available in this. And all you guys have decided to go more the wellness in retail branded route versus the textiles or materials direction. You know, working directly with the plant. Can you tell us why you decided to go that route so far?
Guest: Jeff Tacy: [00:14:52] Yeah. And that's actually a great question. You know, we just in America, we just don't have the technology necessary to go mainstream with fiber right now.
Guest: Jeff Tacy: [00:15:00] So, you know, for us, CBD was something that was manageable. You know, we're already have processing facilities for other types of herbs and things like that. So, you know, growing for CBD as opposed to fiber was a no brainer for us. That's where the opportunity was. And we knew the you know, the market itself was going to go up really quick. And, you know, again, we've just been very fortunate that we saw it that way. And now that we've built all these businesses to achieve vertical integration, it's been quite amazing because, you know, we can scale as fast or slow as we want to scale because we own the entire supply chain.
Host: Nick: [00:15:34] So tell us a little bit about your supply chain. Walk us through your profit centers and talk about what advantages you have for being vertically integrated.
Guest: Jeff Tacy: [00:15:45] Well, it kind of goes back to about a year and a half ago when I first opened the dispensary and I realized that the supply chain was the big hiccup in this whole industry, because you've got companies that are out west on the West Coast. You've got companies that are on the East Coast. And you've got these, you know, different time zones you're dealing with. You've got different business philosophies and a brand new industry. So, you know, I pretty quickly was like, you know what? I'm not going to have to deal with this forever because I'm just going to go ahead and own the entire supply chain. So it's really unique because, you know, our farm grows the plants.
Guest: Jeff Tacy: [00:16:18] And of course, now we have other farms that we've added because our you know, our supply our demand has gone up so much that we can't grow enough just on our farm. And then, you know, manufacturing buys distillate and crude and isolate to put into the products that we're making. My distribution buys the raw flour from the farm, which, you know, that's bringing income into the farm. My manufacturing business sells to my distribution business, which keeps my manufacturing business profitable and running and then my distribution business sales to all my dispensaries that we own, our corporate dispensaries.
Guest: Jeff Tacy: [00:16:52] And then as people are gonna learn more and more is that we launched a franchise company a few months ago. We have our first franchises sold. Each one of those new store openings represents a pretty large wholesale account for my distribution business.
Guest: Jeff Tacy: [00:17:05] And so far, knock on wood, you know, everything seems to be working out pretty well. You know, we've built in multiple profit centers and right now everything's just kind of flowing along and doing good. And I'm expecting a massive amount of growth in 2020.
Host: Nick: [00:17:20] So your online public offerings have been specifically for the wholesale and distribution part of the business. Can we dig in a little bit? You just previously mentioned a bit. Can we dig in a little bit about that part of the infrastructure and how you're growing the wholesale distribution?
Guest: Jeff Tacy: [00:17:39] Yeah, I mean, I love this subject, Nick, because, you know, my wife and I are grassroots man. We started this stuff from scratch. We didn't borrow any money. We didn't, you know, go out and raise big v.c money or anything like that. So, you know, we've just leveraged what little bit we had from one business to the next business to the next business. And interestingly enough, I had so many friends, family and customers coming into our retail stores that were like, hey, you know, we want to invest in this industry. And they just didn't know how to do it. And after enough of that, I was like, well, to be quite frank, I got to figure out a way to help these people spend their money and why not do it with us? And Frannie's brand. So I went out, started research and I found startengine and I thought it was genius because other than or unlike other crowdfunding platforms where you just give me money to do a project, people actually get to own a piece of my companies and have a vested interest and help me grow my business. So it's really been such a huge win win because it's provided capital for me to continue to grow and expand the wholesale and distribution business through like higher and higher quality people building up my inventory, bringing in different types of equipment that make things more efficient. And one of my favorite parts of the whole story is, I now have over a thousand stock holders and there is not a single state in the country that has not purchased stock. And I've sold stock to people outside of the country, which means that all those people now have a vested interest in supporting my brand, having their family and their friends support my brand as well. And I got paid to do it. It was awesome. And, you know, I had to give up a little piece of my company. But for me as a grassroots startup, total win win man.
Host: Nick: [00:19:29] Absolutely. Let's talk about e-commerce a little bit. How do you plan to grow this brand and still keep this strong connection to the land that produces all the products that you sell?
Guest: Jeff Tacy: [00:19:41] Man, you know, I mean, we're always going to grow on the farm, so we're always going to be able to go back to the farm to do all our video shooting. And you know what we're building right now. And so our digital assets as a whole, lotta education. You know, we know and we've learned through experience that, you know, getting people educated is the pathway to them making good decisions as they consider adding CBD and cannabis to their healthy lifestyle. And, you know, there's a lot of confusing and conflicting information out there on the Internet. And we want to be the go to source for anything, CBD and hemp, because, you know, you people have to get the information from a trusted source to make sure that it's accurate.
Guest: Jeff Tacy: [00:20:23] And it's giving them, you know, what's in their best interests.
Host: Nick: [00:20:28] This is an extremely competitive market. One unique area for growth you have in your business plan is the opportunity for other business owners to partner with you and open a franchise. How does this work and how do you plan this is going to help grow your business?
Guest: Jeff Tacy: [00:20:46] This is a subject I love because, you know, this industry is very confusing.
Guest: Jeff Tacy: [00:20:51] There's a whole bunch of pitfalls, a whole lot of scams and weird things going on in this industry. So, you know, people are trying to jump into an industry that is super, super complex. We've got regulatory issues, banking stuff, credit card processing stuff, you know. So partnering with a company that has put in the work, spent the money and the time to get this all figured out and offer up a pretty simple retail business that has the fewest amount of moving parts is any business that I've seen in a long time.
Guest: Jeff Tacy: [00:21:24] It's a pretty attractive proposition coming from a guy that started, you know, a dozen businesses or so in the last 20 years.
Guest: Jeff Tacy: [00:21:32] So big picture, where do you see the hemp industry going in the short term? And how do you picture Franny's companies? How do you see their place being in that that big picture future?
Guest: Jeff Tacy: [00:21:48] It's funny, like, you know, right now in the media, I mean, it's already becoming a crowded space, you know.
Guest: Jeff Tacy: [00:21:54] But one of the cool things that differentiates us from a lot of the other noise that's out there is that my wife and I started as farmers. We still continue to be farmers. We've been building our story for seven years.
Guest: Jeff Tacy: [00:22:05] So for us, you know, we have something that anybody else entering into the space can't go back and recreate. I mean, you know, it's a historical record of what Franni and I have done. So, you know, it's we really kind of got lucky. But we also saw the opportunity and acted on it as far as like the brand and stuff like that.
Guest: Jeff Tacy: [00:22:26] I mean, I'm talking to people in Europe and South Africa and China. And I mean, there's just so many potential markets out there for us to grow and expand into. I just keep showing up everyday because it seems like every time I open up my laptop, pick up my cell phone. There's more opportunity out there. And I just got a way out. Which ones are the best ones? And that's what I'm going for every day.
Host: Nick: [00:22:50] So the current offering is oversubscribed.
Host: Nick: [00:22:54] Are you guys done raising capital or are you planning on opening anything back up again for people to get involved?
Guest: Jeff Tacy: [00:23:01] Yes so. Without risking saying too much. There's always new news coming out of Franny's brand, I promise you saw all I can say is get hooked up with us on to our different social media platforms. Keep your eyes open, because I'm constantly trying to come up with new ways to put the company out there and give people opportunities. So, yeah, there's opportunities coming up and it's soon before the end of the year.
Host: Nick: [00:23:25] So if people want to stay up to speed, they want to get the updates. Where do they need to go to get the updates on the company and to stay up to speed on with everything you guys are doing?
Guest: Jeff Tacy: [00:23:35] I mean, go to Franny's pharmacy dot com and, you know, get hooked up on our newsletter for sure. And then from there, we've got all our Twitter and Facebook and Instagram links right there. Go ahead and make friends with us, because I'm telling you, we're putting out a ton of content. We're putting out really high quality educational pieces. And I'd highly recommend for you to get it, get involved in it. And, you know, we keep it fresh. So come be part of the family.
Host: Nick: [00:24:01] All right, Jeff, this is all very exciting stuff. We're going to be closely following the success of your companies over the next few months. You are the perfect example of why the Jobs Act loosen up regulations to allow small businesses better access to retail investors.
Host: Nick: [00:24:18] I want to say congratulations on all of your success so far. And thank you for joining us on the show today.
Guest: Jeff Tacy: [00:24:24] Thanks, Nick. I appreciate you doing. What you doing, man?