Sunny Ray sits down with Seth Yakatan of Katan Associates, who describes building a professional services firm for cannabis in the mold of Bain or McKinsey. Yakatan traces his path from venture capital analyst to private credit and healthcare, and explains why he entered recreational cannabis around 2018 after seeing how few serious advisory providers existed. The conversation covers why raising capital in the sector is so difficult, why actual cash flow matters more than a hockey stick deck, and how founders should vet investors before taking their money. Yakatan describes his Ordo Verde group, which looks at cultivation, manufacturing, brand and retail across many markets, and shares what has worked in growing the firm, including conferences and one on one qualification calls over cold outreach. He also explores how federal changes, including rescheduling and the end of the tax rule known as 280, could favor certain operators, and why gross margin capture is a key signal of durable cash flow. He closes with his upcoming events and the ways to reach him directly.
Seth Yakatan explains why cannabis needs its own Bain, why actual cash beats hockey sticks, and how to vet the investor before you sign.
What does 'the Bain Consulting of cannabis' mean to you?
I'm trying to create something that doesn't exist. In emerging markets there's opportunity, but cannabis is so constrained that there are few serious professional service providers like a Bain or a McKinsey, and you still need that skill set. That's what I set out to build with my group at Ordo Verde.
When did you decide cannabis needed its own version of Bain?
Probably around 2018. I went from VC into a private credit fund and then healthcare for many years, then got into recreational cannabis earnestly. I was shocked by the lack of professional providers in banking and consulting. There's no playbook like other industries have, and big institutions avoid it, so I saw white space and leaned in.
What does a fundable cannabis deck look like?
Actual cash flow. Show me something with real cash flow and a plan to build to actual demand, not projected demand. Many companies built monster facilities expecting the world to need them, and a lot failed. I call it the dry cleaner model: something small that just makes money. Actual cash, every time.
What should founders ask before taking an investor's money?
Ask whether you can talk to companies they've invested in previously and see how that went. Founders get swept up when a big investor shows up with a big check. Do the same diligence you'd do on someone marrying your child. Investors have a job, which is to get a return, and they aren't your friend when a covenant trips.
Who is usually in the room making the call when a company brings you in?
Usually the CEO or the single largest shareholder. I call it mind share. If the key decision maker isn't texting me late at night asking what to do before a board call, it probably won't work. Like a trainer, I can give you the program, but if you don't follow it, nothing I do makes a difference.
Which efforts to grow your firm have paid off, and which would you bury?
I'd bury cold outreach, because the realistic pool of cannabis companies that can pay for this kind of consulting is maybe 50. What paid off is attending conferences and pre-qualifying people through discovery calls. It all comes back to relationships. If 150 CEOs matter in the industry, I'm texting 111 of them.
What sign in the numbers tells you the cash flow will last?
Gross margin, specifically how many layers of margin capture you own and how efficient each layer is against your peers. A vertically integrated company captures margin across growing, processing, brand and retail. Relatively asset light brands that bring distribution in house and control their own destiny have also proved wildly profitable.
Where can people learn more about you?
I post every day on LinkedIn, unfortunately. I have a Katan Associates website, an Ordo Verde website and a Seth Yak branded website, and I send out two or three newsletters a month. Send me a DM, an email or a text. All my information is public, and my phone is always on.
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