At CannaList Conversations, we sat down with Jeffrey to talk about their latest round of funding and what’s in store for Pistil going forward.
Pistil Data is a secret weapon for cannabis sales teams. Pistil’s platform makes it easy for cannabis brands of all sizes to get into new stores, expand their shelf space and get faster re-orders. Pistil makes selling cannabis easier. The company gives clients new revenue opportunities and simplifies the complex cannabis market by providing information that helps the industry grow. Pistil analyzes billions of data points every day, giving brands the intelligence they need to get in new stores, expand shelf space, and get faster re-orders.
(edited for publication)
Good afternoon, and welcome to another edition of CannaList Conversations. Today we’re here with Jeffrey Graham of Pistil. Jeffrey, how are you?
Good. Thank you.
You guys have had a lot going on.
You know, it’s never a dull moment. That’s true. Yes, it’s interesting; there has been a ton of money going into the cannabis space lately.
I think I saw a quote somewhere in excess of a billion dollars going into the space; truly a hot space. But you guys are going into it from a different angle, from the data perspective. So, tell us what Pistil is all about, and give us a little bit of background?
Sure. We help cannabis brands, and distributors sell their products. We try to make the sales process easier for them by giving them up to date information at a local level; to help them understand which stores are most likely to stock their products, which stores they should call, and we give them helpful information to make that sales process more effective. We are operating in California and Colorado right now, but we’re rolling out to an additional 13 States next year. And we’re a data company that is focused on just helping make the whole process of selling cannabis easier.
And why is data so important to the cannabis industry? I mean, you know, the cannabis industry has been fine as a black market. And I don’t know how much data was going around back then, so why now?
Well, when you’re operating in the black market within a legal regime, you don’t want to collect a lot of data because data can get you in trouble. So, it’s interesting that the cannabis industry started from way behind the starting line compared to most industries, actually being a data-averse industry. I’m not one to judge whether things were going fine with or without data. And, it is, in many ways, it is ancient history. But every business that is trying to make good decisions, and trying to operate efficiently, needs information to do so.
I worked at NorCal Cannabis for about a year as head of business intelligence. We had to decide what products would most likely be successful if we launched them. How do we price our products? What stores and regions are most likely to stock our products? And how do we go to market? How do we operate and optimize the efficiency of our sales force? Of course, you can’t make those decisions only with data, but if you don’t have any data, it’s very unlikely that you’re going to make the best decision. So, data is important in every business. And as the cannabis industry grows and businesses become more complex, data will be vital.
And are you finding challenges gathering this data because it’s a new industry? There’s not a lot of historical data. I would think it’s relatively new in the last couple of years. How has that been?
It’s a good question: the gathering of data. Well, the amount of data in cannabis is quite large for a number of reasons, primarily because it’s so regulated. So, there’s a lot of data regarding licenses and stores. We don’t deal with data right now, except for, obviously, seed-to-sale data, which is a huge part of the way the industry operates. And then the cannabis industry is modernizing, like every other sector of the economy.
As more and more things come online, more eCommerce, pickup delivery, and that type of thing. That also increases the amount of data in the world for cannabis. What makes cannabis data particularly challenging is how messy it is. If you think about, for example, picking a category of liquor. There are 10,000 skews in the average big box, huge liquor warehouse. Ten thousand skews is a lot, but they’ve standardized their packages. So, there are skews you can gather and use to catalog the manufacturers, the brands, and the products in liquor pretty easily.
In Cannabis, however, some brands are being created all the time. So certainly, there’s a huge dynamic change in strains in terms of what people are growing and what they’re calling their products. And there are no standardized data systems that are shared across the industry. So there’s a lot of data, but it’s really, really messy. And to turn that huge amount of messy data into something that a salesperson can look up and say, “Oh, I should call this store.” And this is probably the product that they’re most likely to stock. So that’s the challenge of our business. And that’s what we’re focused on nailing.
That insight sounds like predictive analytics. Is that correct? This is the product the user most likely wants. Is that an AI-based recommendation?
We are “decision support” for the salesperson. We’re not at the point now where we can tell that salesperson with a 93.5% confidence that this is the product, but there are some fundamental ways we can help salespeople. First of all, we help them understand simply within a local area. So down to the city. And actually down to the individual store. The stores that exist in their region, the ones that stock their products, the ones that stock your competitors’ products, the products on the shelf, the pricing, and what’s changing over time.
That’s information that, without Pistil, you don’t have. You may have your spreadsheet, and everybody might have their spreadsheet, but things get messy in terms of a source of truth. So, we’re the source of truth for that information that helps the salesperson narrow down the type of stores they may want to call or visit, and then get a good sense of what that store is all about; what’s happening in the store.
And then, on a day-to-day basis, we figure out what the opportunities in that store are. What’s out of stock? Where are the holes in the menu? Where have price changes indicated that a problem product moves very quickly or very slowly? So, we’re not deciding for the salesperson, but we’re giving them crucial information that helps them better choose how to use their time.
And you’re pushing this out through an app to their phones; when they’re out in the field. Is that correct?
And you said California. Your markets are California and Colorado. So, you’re in some pretty established markets, as far as being around for a while. But how is it different when you begin to look at Chicago or New York, which are relatively new and coming online and have not had the track record of Colorado or California?
Every state is so different. We’re rolling out to Arizona this month and Nevada, Washington, and Michigan. And in each state, as we roll out, we learn about how different the situations are, which can range anywhere from how many stores are in the market, how many retailers, whether it’s ultra-saturated, or that there’s a very limited number of licenses. You can be ultra-saturated, such as a mature market like Oregon, or you’ve got Nevada, where there are very few stores; so, just very different dynamics. There’s the general maturity of the market in terms of the products and the number of products, and just how complex it is for brands to navigate within those markets. I would say the two extremes would be Colorado and New York. New York doesn’t have a market to speak of at this point. So, that’s not a place to help brands sell into retail stores since there are no retail stores yet. It just really depends on the market. And we’re learning as we go.
And part of your growth strategy was to raise private equity. Can you tell us a bit of that?
We didn’t raise private equity. So, no, it’s all been Angel, as well as venture capital.
Yes, private equity is what I meant by venture capital. So, you guys recently raised around close around. Customer already. Correct? And how was that experience compared to having raised money before in other industries? How was it to raise a round of equity?
It takes a lot of time and energy to raise equity, and you’d rather spend that time building the business, that’s for sure. So, it’s a necessary evil.
Yes. When you’re raising money, you’re not doing anything else.
It takes a lot of energy and focus, so we did it over about 12 weeks from start to finish. And that’s a lot of time in the lifecycle of a startup. So, it was somewhat of a learning process; certainly learning how to do it; somewhat of a learning process talking to different funds. We learned the most from Casa. Our conversations with Casa Verde helped build that relationship when we went into that round, being an early-stage company in cannabis. We need to learn; we need to be a learning machine. And we also need connections, introductions, and expertise. And Casa was strong from that perspective. So, that was positive; building those relationships and getting that perspective from a player like us, who has so much experience in cannabis technology every day.
And how does that change your trajectory?
It allows us to move faster. It will enable us to put resources behind the nationalization of our product. So, we know how to roll out to a new state. We know what the playbook is, but it takes resources to do that. So that speeds things up, and it gives us some help to export different product lines.
And are you guys currently only in the US market?
And will you be looking to come to Europe?
Not on the foreseeable horizon? No.
Okay, so enough is going on in the US to keep you busy.
Yes, for the next couple of years, for sure.
There are other data analytics companies out there. How do you differentiate yourselves from them?
Well, it’s a big space. Maybe we’ll define the way we think about ourselves and then have the conversation from there; our product focus and philosophy are to shorten and eliminate the gap between providing data and allowing someone to make a decision. We think that what we sell to our clients is not data but business opportunities. And that’s the filter that we put through the lens of all our products and product ideas. We don’t build a system that allows you to, you know, encourages you to explore or to analyze or to, you know, some clients do that.
But we want to make it very easy to say, “Hey, here’s an opportunity today for you.” And, to do that, we need to be very specific, we need to be very local, we need to be very fast. The usability of our products needs to be high. So, traditionally, data companies have looked more like market research companies for the most part if you kind of think about just one aspect of the data space. I’ve used those tools, and they’re great for making a PowerPoint presentation or having a conversation at a board meeting.
Still, we are focused on a much more tactical level for someone on the ground, planning their day and giving them specific opportunities they don’t need to translate but can act upon. So, that’s our general philosophy. And I think that makes us unique in the cannabis space. In this perspective, we’re not market research. We’re really about market intelligence, which allows you to make very quick and profitable decisions.
And this is a relatively easy and user-friendly platform, which doesn’t require a big IT department to support it.
Correct. That doesn’t require any IT department for support. It’s a platform where people can click a button on their phones. And we’ve built the service with the sales rep in mind, plus a lot of folks in cannabis sales are not in the business because they want to analyze data. They’re not in the business because they were math majors; some of them may have been, but we really want the product to be very easy to use, and very literally, to make it easy for someone who’s driving around in San Diego and is pulling up our application before they walk into a retail store to get some information. So not only is it not a heavy lift from a company perspective, but it’s not a heavy lift from a user perspective either.
And what kind of feedback are you getting on the product?
Amazingly positive stuff. If people go to pistildata.com, they’ll be able to see a lot of the testimonials. I think it’s a combination of some of the stuff we talked about, making things easy for folks and being unique. Just solving a problem that, if you’re a sales rep, you have to spend time going on Weedmaps, surfing Instagram to stay up to date with stores and brands, going to the Bureau of Cannabis Control in the respective state, trying to keep track of licenses, and all of that work that you need to do as a salesperson to be apprised of your local market; we take that on, and instead of you spending 20 hours a week, it’s now a half an hour a week. It’s just as easy to use an app that looks like any other app on your iPhone.
And so, where will you go in 2022?
We’ll be rolling out to additional states and exploring other products, as I mentioned. But, for now, we’re laser-focused on the sales rep in the field, our clients, our sales managers, sales operations people, and VPs of sales. We want to make sure that we have the right toolset for them, which is somewhat of a different use case; assigning territories and helping manage the team. And we think there are opportunities among retailers to understand the market at a very local level to decide what to stock, how to price it, and how to promote their products.
And to go back to an earlier topic: in working with Casa Verde, you mentioned, I think in a Business Insider article stated, you were very interested in working with venture capital players who are in the cannabis space, as opposed to more generous. And why was that?
I think there are two reasons. The first is, what I alluded to earlier that it’s essential to us to acquire expertise and be a deeper part of the ecosystem, the partner ecosystem, so only a cannabis firm can help with that deep level of advice, as well as integration with other partners; not technical integration. I think the other thing is not everybody understands the opportunity that cannabis can be, which is surprising to me because it’s very clear to me how vital cannabis is right now as an industry, and how much more important it’s going to become if you think about that 10,000 SKU liquor superstore. Basically, within that Superstore, almost every one of those products is water, sugar, and alcohol in some combination. And nearly all of those products provide the same type of effect on folks.
In contrast, cannabis can be so many different factors; it can have so many other impacts on people from a physical, emotional, and mental perspective that can be extremely useful. So, I think the industry has a lot of potential and promise; that’s so clear to me when talking to a firm that doesn’t see it and then trying to convince them of that. That’s a heavy lift, and it’s a waste of time.
I also know that some firms can’t work with cannabis yet because of the laws in the US. So, those are the two reasons why it just makes sense. It was much more efficient to talk to folks who understood the opportunity of cannabis and had knowledge of the industry. They seem like a much better partner at this stage in our company. I see, for example, other software companies as they get to later stages and start to develop relationships with different types of equity partners. Still, right now, for us, Casa was the perfect partner.
And you mentioned that one of the challenges is there’s not a standard format for data within the industry. Is that something you will champion? Or is that something that you think will get moved forward? What do you think? How do you resolve that?
Well, we have learned how to resolve that within the walls of Pistil and develop technical solutions for it. So if we’re going to tell you, “Patrick, if you’re interested in understanding your competitor and product, such as something connected to Gelato, 3.5 grams, and you want to know what stores are stocking that product in California today, we need to provide you with a precise answer.” That’s the question we need to standardize and clean all of that data across the state of California. We report data from 91% of retail stores in California.
So, to provide an excellent answer to that question, then tell you, “here are the stores that are out of stock of that product,” or “here are the stores that stock that product, but don’t stock your product,” it requires a high level of update accuracy and precision. And we’ve solved that for ourselves. I think there’ll be opportunities in the future to help other companies do that as well because if you’re an MSO and you have 14 stores are 140 stores. You can answer that question for yourself. That’s also pretty frustrating, but right now, we’re primarily focused on our data platform and building new products based on that platform.
Well, Jeffrey, we very much appreciate your time today. It was great to speak with you and learn what you are doing. I’m sure you’ve got some exciting things ahead of you as you roll out into new states. So, we’ll be watching that. We will make it a point to put some of the information below so that folks can check it out and visit your website and check out the app. We appreciate your time, and we hope to hear great things from you guys.
Great. Thank you