On a mission to enter the cannabis space, siblings Marie Montmarquet and Allen Hackett left their homes in Tennessee to join the action in California. Just a few years later, they’re now co-founders of MD Numbers, one of the most successful vertically integrated cannabis brands in the country.
Learn more at https://www.mdnumbersinc.com
[00:57] An inside look at MD Numbers and its subsidiaries, from MD Farms to Marie’s Deliverables
[1:17] Marie and Allen’s backgrounds in cannabis and how they came to start MD Numbers
[3:56] How Marie’s Deliverables has evolved since its start in 2015
[6:24] Why Marie and Allen decided to launch MD Farms and how this has helped them better compete in the Socal market
[7:33] Consumer preferences in Southern California versus Northern California
[9:56] The types of strains and wholesale services provided at MD Farms
[12:41] MD Farms’ mixed-light greenhouse facility and their plans for an extensive new indoor facility
[17:52] MD Numbers’ third company Legacy Coterie, a full-service cannabis consulting service focused on developing equity in cannabis
[18:44] The biggest compliance challenges cannabis brands face today and how to go about navigating them
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A-insider dot com. Now, here's your program.
Sinead Green: Today's guests are Marie Montmarquet and Allen Hackett, the Tennessee-born sibling duo that moved to California on a mission to enter the cannabis space. A few years later, they're now co-founders and owners of MD Numbers, a family of vertically integrated cannabis brands headquartered in the Bay Area. Marie and Allen, Thank you so much for joining us today.
Allen Hackett: Thank you so much for having us.
Marie Montmarquet: Thank you so much, Sinead.
Sinead: It's great to have you here. Can you guys give us a sense of geography, where are you in the world today?
Marie: I'm in San Francisco.
Allen: I am currently in Los Angeles today.
Sinead: Great. What is MD Numbers on a high level?
Marie: MD Numbers is a vertically integrated brand in California that encompasses cultivation with 50,000 square feet, greenhouse facility, distribution, processing, we have a nursery as well, and a delivery company.
Sinead: Awesome. Can you both share a little bit about your backgrounds in cannabis and how you came to start MD Numbers?
Allen: Sure. I'll start us off. I've been gravitating to the plant, cannabis, early on in high school, something just recreationally doing, not necessarily had a vision or making a career or even trying to go to lengths of fighting legality. Coming from the South where we're from, it's highly illegal, that pushed us to come to California. It was more Marie that made the initial push that got us to California. She came out with other business ventures, and then eventually, wanted to start a delivery service, then I followed suit. We saw the opportunity and then we doubled down on it. Six years later, we built up MD Numbers that encompasses all the businesses we had built in this time period.
Sinead: Great. Marie, you're from Nashville, is that correct? What got you into cannabis originally?
Marie: Yes, I'm from Nashville. When I was in college, I began getting a lot more educated on all the benefits of cannabis and just the understanding of the free-mindedness of not necessarily letting a law control the benefits of the plant. In Tennessee, of course, it's still criminalized, so I knew that I needed to leave Tennessee. That's the main thing that brought me to California, but in Tennessee, I definitely learned a lot. Allen and I were both affected by the criminalization of cannabis in Tennessee, and we're super driven to leave and be somewhere we could sustain a legal cannabis business.
Sinead: That's great. MD Numbers, that's really just the umbrella for multiple companies you guys now own, but can you tell us a little bit about your start in California and how you got up and running in that market?
Marie: Yes, for sure. This was back in 2015 when we originally got started and everything was still under Prop 215. Back then we knew that we wanted to get started, whether it was distribution or delivery, and delivery was the lowest hanging fruit, so to speak. We had someone that we could easily get really premium well-crafted strains. Back then, there was only about 10 deliveries in the county that we started in. It was a lot less saturated than today, but just being an early adopter was one of the main things that allowed us to compete even today and transition from Prop 215 to Proposition 64.
Sinead: Awesome. Then delivery service, it was Marie's Deliverables, which you started in Redwood City, which at the time was a dry county with zero dispensaries. What was that experience like and how has Marie's Deliverables evolved since then?
Marie: It's definitely a good question. Back in 2015, when we started, that was the city that we originated in and Redwood City is actually still a dry county when it comes to retail. Allen and I have applied for one of the first retail licenses in Redwood City. We applied in February. Fingers crossed, that will be one of the six licenses that are the first in the county to turn it from dry to wet, so to speak. That experience taught us so much, and a lot about business intelligence because we touch pretty much every part of the supply chain, inventory, purchasing, logistics, marketing, managing employees, managing a fleet, and was really able to establish the needs for what we wanted to develop in the future and get into cultivation and a lot of other things.
That was in 2015 when we started and established it in Redwood City. In 2016, we were launching in LA. We went to Los Angeles and transitioned into opening up down there. That's when we had a big revolution or a revelation rather about needing to get into cultivation. 2016, we launched MD Cultivation and we were putting flower that we were growing into the delivery service. Then the end of 2017 is when everything transitioned from Prop 215 to Prop 64. We went from Redwood City and to San Francisco and launched there in 2018.
We went through a lot of different product scarcity issues and all the compliance and regulations really put a lot of small businesses out. Then in 2019, there were a lot of different tech integrations and just continuing to build the business. Now, going into 2021 after COVID last year, of course, everyone saw a spike in business due to e-commerce and delivery being the go-to during COVID, and I would say, still is the wave of the future. Now, we're also still in business and planning to do a relaunch in the future with a new call center and collaborations with in-house product.
Sinead: Great. You mentioned MD Farms a second ago and that you had a big revelation to start cultivating your own product. What sparked that revelation and how has that better enabled you to compete in the SoCal market?
Marie: What we learned when we went to LA was there was a lot of competitors down there with delivery services that are all cultivating their own product. Because of that, they were able to have a really low cap. Really low max price, which was around $30. At that point was really the future that we were being able to see but in real-time that we were going to need to have control of a piece of the production somewhere to compete. Not just be in the supply chain, but own a piece of the supply chain.
In cannabis, there's just been a race to commoditize this plant and bring down the price as fast as possible with a lot of corporate cannabis. We wanted to grow premium flower and create a premium brand and that would enable us to compete in the California market anywhere as long as we could own a piece of the supply chain.
Sinead: Great. I've read when you entered the SoCal market, you discovered that the consumer preferences, there were a lot different from the NorCal market. Can you talk a little bit about the preferences there and the differences in the flower market in each part of the state?
Marie: It's crazy. I always say there's a lot of microclimates in California, and it's a joke, but not really a joke that you really do have to sell cannabis differently in each area of the state because in Southern California specifically, there's a lot of strains that they prefer down there that aren't necessarily really popular in the Bay Area. Southern California is really known for ocean grown and OG strains. When we went to Los Angeles in 2016, we didn't have necessarily all the OG strains that the preference was down there. We had a lot of cookie strains. We had a lot of different varieties of sativas and non-OG strains, but for whatever reason, they just have a lot of different preferences and are really OG-dominated down there.
Allen: To add to that too, I think people don't realize that LA is so big too. I mean, there's a lot of tourists there compared to the Bay Area, which is really small. It's really a lot of niche smokers in different communities whereas Los Angeles is really wide open, a lot of tourism. With tourism, you're looking at close to 30 million people annually that visit and travel in Los Angeles. A lot of that comes with people not necessarily educated on cannabis. When you tend to get uneducated people, they tend to like strong candidates, something that gives them a really strong effect. They want to feel that high, compared to what I'm noticing in the Bay Area.
There's a lot more functional smokers, people that like to be high, but want to be able to work and do things. A lot more sativas, a lot more hybrids, a lot more flavorful strains, I would say, up North in the Bay Area compared to in Southern California. It's more of a preference on THC content, how high is the THC, how stoned do I feel? That's where you get into more of the ocean-grown stuff, the OGs, which tend to be a little more stronger and gassier than your traditional hybrids or exotic flowers.
Sinead: Great. That makes sense. Touching on what you were talking about with the strains there, right now, you have your own in-house brands in the works I've read, you're in the research and development phase there, but right now you provide wholesale and private labeling at MD Farms. Can you tell us a little bit about all of the different strains you grow and who your typical client is?
Allen: Yes. For us, being able to have the delivery service and having all that data there, what people are buying and what people are liking to smoke and also what our competitors are doing as well because we can see everybody's menu on the same search engines that we have, we use that with our farm trying to make sure that we're growing strains that are popular, that are sought after, and that quite frankly are easy to sell.
We tend to grow a lot of hybrids, a lot of exotic strains there. We don't necessarily dive too much into sativas or sativa-leaning products. One, it's a little harder to grow. The climate that we have in Monterey County, it's a lot easier to grow some of those exotic strains. To name a few, for instance, we have a nice Gelato #41 cut, Gushers, Chem Cookies, Lemonade. We have a lot of Kushmans and different things that we got from different breeders throughout the state. We work with a few different geneticists and a few different breeders to try to curate strains that work well in our climate with our style.
Getting into cannabis and cultivation, we've seen a lot of people's shortcomings and a lot of people fail. We had those same struggles going into it. We were just on a smaller scale, so we can take those punches and keep moving. In a lot of those things, we're trying to build out a brand. It is very expensive to build a brand out in today's market. That was something that Marie and myself just did not want to focus on. We really wanted to focus on getting better at cultivating, getting better at offering delivery to our customers, and getting better at building relationships with different distributors throughout the state. We held off on that.
Now, three, four years later, we're looking to add a brand to our resume and have that in-house brand for our customers to be able to get a product straight from the farm straight to them, to the consumer. It's something we're working on now, and hopefully, with our new retail applications in line and with the farm expanding, we'll be able to create that brand and have it in the market and be able to provide it to our customers.
Sinead: Great. You said the cultivation side is just hugely important to you at MD Numbers and you've placed a lot of emphasis on it and it's clearly been a huge benefit to you guys that you have total control of that part of the supply chain there. Tell us about your mixed-light greenhouse facility and the new indoor facility that you are currently working on.
Allen: Very blessed to be able to have and got into the county of Monterey early when we did in 2016 and locked down a facility there. It's really hard to find a property in that regard. We currently have a 50,000-square foot greenhouse, 30,000-square feet of flowering space, and 20,000-square feet of nursery. We produce on average around 500 to 600 pounds per month that we wholesale and offer white label services for.
We have about 15 to 25 employees. That ranges depending on [unintelligible [00:13:25] [tremors?] and things like that. We operate year-round, 365 days a year we are open and those plants are getting fed and they're getting sunlight and they're getting nutrients and we're catering to those plants year-round. That was a big benefit for us, especially when we launched the delivery of having this other sector that we could, one, build relationships within the cannabis community, have insight into different strains and different things like that, and just have more data to be able to provide a better end product to the user that we're servicing.
With that, we decided to launch an indoor facility. In Greenfield, California, we were recently approved from the City Council for all of our regulatory permits and building permits to build out a 20,000-square foot indoor cultivation facility there. It'll be 200 lights when completed with a tissue culture lab and an R&D nursery as well as distribution as well. The main reason we wanted to launch that is because, like I said, going back to the delivery, we have all the data. We sell all types of product from high-quality indoor product to low-quality indoor, to greenhouse product, to mixed-light, to outdoor product. There is something for everybody. There's not just one strain or one type of cannabis that everybody likes. With that, we're purchasing indoor product from different distributors and different brands throughout the state.
We were like, "All right, if we can replace that with our own brand and then launch that brand and have indoor and mixed-light and greenhouse products, then we'll have a better chance of making better margins for ourselves." That's been my focus for the last year is trying to get that up and running and launch that, raising funds for it as well, then this will all coincide with the distribution and delivery that Marie's overseeing in the Bay Area, so our product will flow up north and hopefully be sold through our delivery through our stores.
Sinead: I've read you've got a huge philosophy about paying it forward, which I love. Part of what you use your cultivation facility for is demonstrations and educating equity candidates who want to get into this space. Can you share a little bit about that aspect of MD Numbers and the different projects you have and why that’s so important to you guys particularly in cannabis?
Marie: For sure. Allen and I definitely come from a background that's been very relatable to a lot of the people that we mentor and coming from a place where cannabis obviously is criminalized and the war on drugs was so big. We definitely take it upon ourselves to use the farm and any other educational resources we can to provide assistance. We partnered with Success Centers about two and a half years now. Angela White there is the manager of the Equity Program and she's definitely been really impactful on Allen and I.
Currently, we have a grant from the Office of Cannabis in San Francisco and the state to provide technical assistance and we provide mentorship and one-on-one counseling for those going through the Equity Program, making sure that they're educated about the supply chain, business economics, and brand creation or where even they want to start in the supply chain and how it fits in with anything they're currently doing and hopefully have the most success because a lot of these things are un-funded and the Equity Programs are currently underfunded when it comes to the larger capacity of capitalization. They might give you a little micro-grant here and there, but they have to really make sure they understand.
We use the delivery and we use the farm, we do a monthly tour on the farm to bring down all the equity applicants with Ms. Angela White, and we give them a live workshop there.
Allen does an amazing job and takes them through the entire farm from nursery through flowering, into our harvesting, processing, showing them the full post-production, everything from start to finish. It's a beautiful tour. Then we offer virtual workshops as well. Every other week, there's a job fair. In the week that there's not a job fair, there's a virtual workshop that we bring in professionals from all around cannabis and the supply chain, accountants, attorneys, all sorts of people to give workshops to those that are underneath the Success Center umbrella.
Sinead: That's amazing. In a few minutes here, we'll talk about how listeners can maybe take part in that because that's an amazing list of resources you guys have there. Going off that, can you tell us a little bit about Legacy Coterie and the work you do there as well?
Marie: Yes. Legacy Coterie is more along the permitting and distribution side of consulting underneath brand development. We have a lot of people that have built really large brands in California that can help with launch strategy, how to take over different areas, and into different brands, into retailers. We do operations consulting. Equity advising is wrapped up in there, just pro bono work that we do for a lot of equity. We bring in the same tools and resources to wrap it all together as a wrap-around service.
Sinead: Great. I'm going to shift gears here a little bit and ask you guys about the cannabis industry at large at the moment. What would you say are the biggest challenges brands are facing when it comes to compliance and legality and how would you advise them to go about navigating those challenges?
Marie: I would say a lot of the compliance and legality comes down to this just being such a brand new industry that's created and overseen by the Bureau of Cannabis Control. You have to make sure that you're involved with all of your local- your city or county and your state regulatory agencies. With that being said, permitting, of course, could be the largest challenge. The timeline for permitting is very long. You might be paying rent on a property far before you're able to even begin the build-out on that property, which is one thing that keeps a lot of people from being able to enter the marketplace, as well as zoning.
The zone, like Allen was speaking, we were very fortunate to be in Monterey County. A lot of people were put in a zone that didn't offer the type of permits that they needed to support their business. Maybe they offered cultivation but didn't offer processing. There's a lot of challenges just being in an area that's not friendly towards the process of coming into Prop 64.
Taxes. Of course, there's so many layers of taxes when it comes to all the pieces of supply chain, but not only that, 280(e) would be where we could start with some progress when federal legalization does happen and we can have normal business write-offs. Currently, that's one huge challenge. We're getting involved with industry because not only do you have to calculate all of your operation's overhead, but a lot of that has to do with things that you wouldn't be able to write off that you normally could write off in another business.
Sinead: Great. Something else working against brands right now is banking. As the Safe Banking Act hopefully gets approved here, what are your thoughts on that and what do you think that could mean for the future of cannabis?
Allen: It's huge. That would literally make or break most people's cannabis careers. Just simple banking on any regular level, you have a relationship with the bank. If you need a loan for something, whether it's short term or long term, you want to expand your business, you want to go buy a piece of property, you want to collateralize money that you have in the bank with a lot of credit or anything like that to help build your business, it literally is the infrastructure with what our economy has been built on with some small businesses getting started.
To have that completely removed from the cannabis beginning in California, it's been very challenging, to say the least. Hopefully, that's something that we could get implemented and then have the current operators and businesses that have been able to stand the test of time, have those resources available, but not having those resources was very, very challenging. It will definitely help new businesses that are getting started, new individuals that are looking to get in the business.
Look, cannabis is very volatile. It's hard to raise money in cannabis without giving your life or soul away to some investor somewhere far off that knows nothing about what you're really doing, or maybe knows a lot about it, but doesn't have the infrastructure in place to actually build it out. With banking, it eliminates some of the predatory lending that people have had to do or deal with thus far.
Sinead: Absolutely. That's a great point about the lending as well. Speaking of capital, where are you both in the capital-raising process, and what are your goals for the year ahead?
Marie: We are currently towards the end of funding what we're hoping to be about $3 million for these next cultivation projects which encompasses the indoor as well as four acres of greenhouse that we have currently in Salinas as well. We want to build that project out and fully fund it. That will be about $3 million total.
Sinead: Great. Awesome. Let's turn to some personal development questions here because you guys, while you live and breathe cannabis, I know you've got other things going on in your lives. First question, is there a book that has had a big impact on your life or way of thinking? Marie, maybe we'll start with you and go to Allen after that.
Marie: Definitely a big person on a lot of nonfiction and just backgrounds for those that have been really, really influential in the past. One book that's super cool that I've read a very long time ago is called What Makes the Great Great. It's by Dennis Kimbro. It's a really, really good book when it comes to strategies for those that have had extraordinary achievement throughout life. It's got a lot of anecdotal stories in there. They're really inspiring.
Sinead: Great. Awesome. How about you, Allen?
Allen: For me, I'm a big article reader. I read a lot of articles, I read a lot of news, I'm really big on current events. I would say different publications that I would gravitate to would probably be different Harvard Law studies. There's some on organization and different ones on being competitive in the workplace and things like that. They're super short and to the point. I've used those to help bridge my lack of business intelligence in this arena. I would definitely say any Harvard Law reviews, studies, or books. I don't have a specific one off the top of my head, but I've definitely read a few that have been gifted to me that have been very beneficial to us.
Sinead: Awesome. Moving on to the next question, what is one thing going on in the industry that you think might have a big impact in the future but might be a little underappreciated right now?
Allen: I will start that. For one, I would say women in cannabis. This industry has been dominated by White men, to start. Very few minorities have had their opportunity to get in and position themselves the way that Marie and myself have. Even fewer women. I would say that is definitely going to change. Like any industry, in any commodity, once women usually tend to get in, it usually gets a little better. I would say that is definitely something that's going to be big for cannabis once it legalizes across federal.
Sinead: Great. I couldn't agree more. How about you, Marie? Anything that you think might be going under people's radar at the moment?
Marie: Definitely what Allen said would be the first thing I would think of. The next would probably be something along the lines of national export, which of course has not happened yet because of the federal laws, but once we are able to export into other states from California and just the difference that will make on the supply chain and distribution and the impact that that will have abroad, I'm very interested to see from national export to global export, what that would look like.
Sinead: Great. Awesome. This can be West Coast or East Coast. I know you guys, you're born and bred in the East Coast and there are some good fast food joints on the East Coast as well. What would you say is your favorite unhealthy comfort food?
Allen: Oh, man. For me, that would have to be barbecue. Whether it's brisket or pulled pork and all of the sides and fixings that would come along with it. That is definitely Southern comfort food that can put you in a sleep coma.
Marie: I would say definitely going along the lines of fried fish, spaghetti, meatloaf, those would be the top three.
Sinead: Oh, man. Those are some classic comfort foods. Awesome. In terms of barbecue, that can be a bit of a controversial topic. Allen, are you more of a mustard-based sauce kind of guy or vinegar-based? What's your preference there?
Allen: Yes, that is very controversial in the South, I will say. I will say I'm probably more of a vinegar-based. I like sweet and sour a little bit. It's crazy you brought that up. Coming from the East Coast to California, I've yet to find really great barbecue in California.
Sinead: That's a shame.
Allen: It doesn't exist. They use more tri-tip and things out here they get away from the pork and the sauces and things like that. For me, I'm definitely more of a vinegar-based than a mustard-based, but sweet sauces are good. I love a good pulled pork sandwich.
Sinead: Being from South Carolina, I'm a little biased. I think South Carolina barbecue is the best, but my boyfriend’s from Texas so we have arguments about this all the time.
Allen: [chuckles] South Carolina is definitely up there.
Sinead: I agree. [chuckles] Awesome. As we wrap up here, you guys, how can listeners find you online and connect with you?
Marie: They can find us at www.mdnumbersinc.com and on Instagram @mdnumbers.inc and Farm is @md.farms.ca.
Sinead: Great. All right. Well, thank you both so much for coming on this show. Really appreciate you taking the time and wish you the best of luck with everything going on this year.
Marie: Thank you so much.
Allen: Thank you for having us. We really appreciate it. It's really cool.
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