Petalfast and the Evolution of Cannabis Distribution: A Conversation with Jason Vegotsky

In this episode, CEO of Vangst, Karson Humiston, had the pleasure of sitting down with Jason Vegotsky, the visionary founder of Petalfast, a company that's revolutionizing the cannabis distribution landscape. Jason's journey is a fascinating one, and he shared insights into the challenges and triumphs of navigating the complex world of cannabis distribution, drawing parallels with the alcohol industry, and his own personal growth as an entrepreneur.

Jason began by giving an overview of Petalfast, a distributor that outsources logistics and warehousing in certain states. He explained the core functions of a distributor in getting products into stores, handling customer relations, and ensuring brands are presented effectively to retailers. Petalfast operates with a selling organization and a field team that represents a portfolio of brands in California, Arizona, Massachusetts, and is looking to expand further as legalization progresses.

The conversation delved into the three-tier system in alcohol, which separates producers, distributors, and retailers to prevent monopolistic environments and to facilitate tax collection. Jason highlighted the differences in cannabis, where vertical integration is common, but he believes that the breakdown of verticals is necessary for scaling and success.

Jason shared his background, starting with a brief stint at Goldman Sachs, which he quickly realized wasn't for him. He then moved into alcohol beverage distribution, leveraging his father's experience in the industry. However, his entrepreneurial spirit led him to partner with a beef jerky brand, where he learned valuable lessons in brand building and go-to-market strategies.

An unexpected encounter at a Wegmans store led Jason to pivot from beef jerky to butane gas, a key component in cannabis oil production. Despite his initial reservations, he saw an opportunity in the cannabis industry and took a calculated risk that paid off when a hurricane in Texas disrupted butane supply, allowing his company to capture significant market share.

Jason's success with butane gas led to a merger with KushCo, where he took on the role of president. At KushCo, he gained invaluable experience but realized the need for a better go-to-market strategy for cannabis distributors. This realization led to the creation of Petalfast, which he envisioned as a distributor that could sell to the alcohol industry without taking on inventory and accounts receivable risks.

When building his team, Jason focused on hiring individuals with a mix of alcohol beverage experience and cannabis industry knowledge. He values the lessons learned from failure and seeks out those who have experienced setbacks to help guide Petalfast away from similar pitfalls.

Looking ahead, Jason discussed the challenges facing the cannabis industry, including the need for consolidation and better regulatory frameworks. He emphasized the importance of being financially prudent, especially in the current climate where investment is scarce. Petalfast plans to pursue strategic M&A opportunities and continue to build its team with top talent.

https://www.linkedin.com/in/jason-vegotsky-138549102/

https://petalfast.com/

Timestamps

00:00:42 - Introduction to Petalfast
00:00:55 - What Petalfast Does
00:02:01 - Alcohol Three-Tier System vs. Cannabis Distribution
00:02:28 - Vertical Integration in Cannabis
00:04:59 - Jason's Background and Career Shift
00:05:25 - Transition to Alcohol Beverage Distribution
00:06:09 - Motivation and Entrepreneurial Drive
00:06:20 - Chance Meeting and Beef Jerky Business
00:07:23 - Learning from Business Failures
00:07:58 - Combining Food and Alcohol Go-to-Market Strategies
00:08:19 - Post-Beef Jerky Ventures and Cannabis Industry Entry
00:09:06 - Introduction to the Cannabis Industry via Butane Gas
00:10:10 - Summit Innovations and Hurricane Strategy
00:12:01 - Merging with KushCo and Leadership Challenges
00:13:07 - Jason's Preference for Startup Phases
00:13:35 - Identifying a Gap in Cannabis Distribution
00:14:08 - Petalfast's Business Model and Hiring Strategy
00:15:36 - Fundraising and Belief in the Business
00:16:01 - Storytelling and Investor Relationships
00:17:39 - Hiring Philosophy and Team Building
00:18:14 - Preparing for Alcohol Industry Entry into Cannabis
00:20:32 - Financial Prudence and Future Plans
00:21:52 - M&A Strategy and Self-Distributing Organizations
00:22:56 - Expanding Sales Forces in California
00:24:29 - Retail Relationships and Brand Support
00:25:17 - Technology and Order Management
00:26:05 - Industry Challenges and Future Outlook
00:27:27 - Credit Rating Tools and Collections Strategy
00:28:39 - Financial Management and Growth Plans
00:29:02 - Closing Remarks and Future Expectations

Quotes

"I think it is the single biggest problem in the cannabis space and why most people fail." - 00:02:39-00:02:49

"I'm not in alcohol beverage distribution. I'm in the tax collection business." - 00:03:32-00:03:43

"I quickly realized that wasn't for me. And I pivoted and got into alcohol beverage distribution in New Jersey." - 00:05:15-00:05:25

"I'm sure you have a similar experience of like, OK, I get up and I work every day, but am I motivated the way that I was motivated?" - 00:06:09-00:06:20

"I met him at Wegmans and got in the next day. And geez, I've failed so incredibly miserably." - 00:07:12-00:07:23

"I don't know if I or anybody else has enough money to be able to do each one of those verticals well." - 00:02:49-00:03:00

"I'm going to Colorado for a week to figure this thing out. Can you come with me? Because I don't know any of the lingo." - 00:09:49-00:09:59

"Hurricane hits Houston. There is no butane coming out of Houston for about three months. I had all of it." - 00:11:44-00:11:55

"I like to go from zero to 10. I'm not 10 to 100, somebody else can do that." - 00:13:07-00:13:18

"I specifically look for people that are coming off of failure." - 00:19:21-00:19:32

Produce By PodConx

Watch Video - https://www.youtube.com/channel/UCNZI8qZy0lKxLO4OTk6P-tw

Karson Humiston - https://www.linkedin.com/in/karson-humiston-64572b97/

Vangst - https://vangst.com/

Recorded on Squadcast

Sound Design by Jamie Humiston