 From the beginning, we recognized that this was going to be a highly regulated industry. MJ Freeway is the best innovator and best partner that anybody can have. We really kind of stuck our neck out in the beginning. I mean, my brother owns a software company and I was trying to talk him into this very same thing and he was like, nah, I'm not going to do that. It's too much of a risk. We are still operating at a federally illegal market and one of the things that we like to say is that our job is to make sure that our clients know that we've got their back because they wake up and break federal law every single day. As a cannabis manufacturer, do you use business insights to help you make important decisions? Well, you'll need them if you want to work smarter and MJ Platform can help you do just that. Well, in any business that's going to be growing, you've got to have a backbone of your business and they're going to be able to manage your business from end to end. We call it seed to sale in cannabis. MJ Freeway, the platform, is our second generation. It's an enterprise resource planning solution. So it helps businesses run their operations more efficiently and also track all of the necessary required data. I guess I would say MJ Freeway is, for lack of a better word, groundbreaking. I mean, we really started the seed to sale tracking system. So in starting the company, we wanted to give businesses tools to help them make their business successful and sustainable. But we also really wanted to give them tools to ensure that they can easily comply with all the regulations facing them. It's cool to see two intelligent women like that who are, again, sticking their necks out before others. The fact that they like to work together and that they see the vision of this industry and it's not just about being on top, it's about actually helping everybody get there with us. They both have an incredible amount of passion and integrity. And I think to me that's everything. In late 2009, I had invested in one of the very first legally licensed dispensaries in Colorado. And as the investor owner who owned an IT company, they asked me to choose what software to run in their business. And there was nothing I could find that was a good choice for us to run in this business. And I was in Telluride, Colorado, where Amy and I both lived at one point in time. I had since moved away visiting over New Year's Eve 2009. And we talked about using her web development firm or some of her engineers to maybe build this product that was needed for these brand new dispensaries in this emerging industry. And at the time we said, we'll do some market research and then we'll decide if we're going to pursue this business. But we drank a lot of champagne and stayed inside and just totally whiteboarded the business and bought our domain names and decided really what was later to become MJ Freeway. When we first started, it was definitely a stigma. We had trouble hiring people. We've talked about that before that lots of people, some of the people who had worked for me previously in my other company, when I asked them to come work on this new venture, they didn't want to and would say things like, what would I tell my kids? I remember vividly living in Atlanta, Georgia when I first started the business and I remember hiding that this was the business I was in. Some of the time I would make that decision. I remember being asked like at kid birthday parties, so what do you do? And sometimes I would say, I have an HRP software business. I think for me one of the biggest challenges at the beginning was I still had my other business as Jessica did and this was a side project and we really had to cross that hurdle in late 2010 of determining is this going to be enough of a thing that it's worth stepping aside from exiting the other business. And that was a huge leap of faith and a very scary one because MJ Freeway was not making enough money to support us to pay us salaries at that time. So we really had to bank on what we saw was the future. This is the first of many double downs. Yes. So the history is really very interesting about how cannabis came to be a prohibited substance. It was actually motivated by big agricultural, primarily the cotton and tobacco industries and there was concern there both about hemp from the cotton industry because hemp was such an interesting fiber, uses so much less water, has so many more applications as a textile and of course tobacco was concerned about the smokable nature of cannabis. So those industries really propelled the U.S. towards this idea of reformadness and then ultimately propelled the U.S. into an international treaty that was what prompted the classification of cannabis as a Schedule I drug. The original campaigns were all around the idea of safer and all the big billboards said safer on them and it was based on an overwhelming wealth of research and evidence that indicated that marijuana is actually safer than alcohol or nicotine or some other products. But they changed the direction and the wording of that campaign from safer to tax and regulate it like alcohol. Tax and regulate it like alcohol was a sea change for the movement for the industry and in the adoption of the idea of we can do this product safely. From a cautionary standpoint we have seen some states try to raise the taxes too high and when you raise the taxes too high that's where we've seen black or gray market pop back up. They have to be careful to not get too greedy there because if they do it'll just push everyone back to the black market and undercut everything that we've been doing. Are you a cannabis grower or producer? Do you process marijuana or infuse products? Are you part of a collective dispensary or legal cannabis retailer? Do you have government compliance requirements for your marijuana business? Every country in the U.S. that has any kind of cannabis regulation Every state in the U.S. Every state in the U.S. Every state in the U.S. They feel like little mini-country stocks because their regulations are so different from state to state. They do. Every state has their own regulatory structure. There's no real consistency around that. So our compliance team spends a tremendous amount of time trying to keep up on what's happening with every state. Our clients who operate in multiple states have a lot of challenge with that as well trying to run a business with consistency when the rules are different on the playing field for every market in which you operate. You know we've seen different states have different attitudes towards enforcement as well. So there are some where in the tiniest infraction like the font on your label is not exactly the right size and they'll shut a business down until it's fixed. States are really not equipped to deal with this kind of thing. They've never had to regulate this kind of thing before. You know it just doesn't exist. There are no other products that have these similar kinds of qualities. Our involvement with the National Cannabis Industry Association through Jessica sitting on the board has really helped us to be part of the effort to educate states and NCIA has become a resource for quite a number of states where they reach out to industry and say okay we're starting our regulations what do we need to be aware of and then industry can provide feedback. You need to consider this equivalency factor. You know trust us you'll be sorry if you don't. That kind of thing. We want enough regulation that we can keep moving the cause forward but not so much that it stifles the ability for new people to get involved or makes the price so high that small operators can't afford to be in the cannabis industry. So 2011, pretty much the whole year we spent trying to fundraise and we did go to banks. We went to private VCs. We went to people who were interested in funding the cannabis industry but at that time you know that was a much less regulated, a much more scary market. The cannabis market was for investors. So there had been no federal statement that gave anybody any feeling of security. The regulatory structures were just starting to come out and we talked to many many individuals who were very excited about investing in us and then when they talked to their lawyer or their accountant the program got nixed. We ended up securing some bridge funding, some loans that got us through to profitability in early 2012. Be clear we signed for those individually. That's true. Severely and lively. I truly believe that our very biggest mistake in that first full year of operating MJ Freeway full time was in believing that we would be treated differently because we were a technology and compliance company that we wouldn't be tarred with the same brush as the rest of the cannabis industry and that just did not prove to be true. Not only could we not get funding but we lost our credit card processing three times that year We had to change banking relationships. Our insurance cancelled us and we had to get different insurance. We had all these hurdles that we thought we would be immune to. I totally agree and it's not just those kinds of relationships. We had trouble finding a company even to print t-shirts for our trade shows. I mean they didn't want to print anything that had a cannabis leaf on it. We lost our email marketing account because they didn't want to distribute emails that talked about cannabis. So there was discrimination at all levels, not just on the financial markets or investment markets. I think given the history of cannabis the fact that when prohibition was initially passed in the U.S. it was funded and organized by big agriculture and the campaign around that was all of this kind of reformadness idea. This cannabis makes you crazy and cannabis causes you to do all these terrible things and behave like a fool and it's addictive and all these dangers were promoted at that time. So I think there's a generation of Americans who grew up with that idea and feel like cannabis is incredibly dangerous. Despite evidence to the contrary. So when you have that idea implanted in people's minds and then you have many, many years of it not being available, of it being you could only acquire it on the black market. If you were to party and your friends were passing around a joint, that was a big deal, that was scary, you were breaking the law. With that kind of cloud over it I think that attitude just kind of permeated a big chunk of our society for a large number of years. Take this garbage and flush it down the toilet. I am just glad that we caught you boys before this became an everyday thing. Get it? What's to say for yourself? I'm starving! If you wanted to get one of the first medical licenses in Colorado you probably could have done it with $50,000 in credit cards. And today we see states that are doing things like requiring $2 million in escrow. So it's keeping a lot of people out of the industry, yes. And because you can't get a loan from a bank it's private wealth game. I think in cannabis it's really interesting too because minorities have been disproportionately affected by cannabis prohibition. The rates of people in jail for cannabis offenses is dramatically more impactful for people of color. Me mentoring is something that's really important because I believe that it's really the most effective way to actually make a difference whether it's increasing gender diversity in a company or in an industry or racial diversity, the programs that you see that are more formal like let's get more women in tech. Why can't we have more people of color? Those typically don't work because they often come from a much more punitive aspect and what people really need is that lifting up aspect. So the U.S. is in kind of an interesting position now because we have legislation at many many levels both state and local across the U.S. that creates a legal structure for cannabis yet we as a nation are still a signatory to this international ban on cannabis as well as other drugs which has put I think our international relations in an interesting position with other countries where we're trying to hold them to standards of this treaty around other drugs and yet they look at us and see that we're not upholding the treaty as relates to cannabis. I think that's one of the big hurdles that will have to be crossed and resolved before the U.S. can truly make a change at the federal level. Is it the position of the INCB do you consult with the DEA in the United States and say to them look what you've got as a Schedule 1 drug that shouldn't be there should be rescheduled or rescheduled because rescheduling will allow more medical research on it. And we reiterate it to the American government to look at the implementation of these prerequisites which are in the convention. So just two words. First it is allowed but under certain conditions and very often these conditions are not fulfilled. In short our problem for the United States when it comes to the medical use of cannabis. In fact because cannabis is Schedule 1 NIDA is the organization that is in charge of whether any grants can be issued for studying it and that makes it actually incredibly hard to study even for researchers who want to study it. So we had a client and we were going to do a massive medical study with the University of Arizona and the University of Arizona got a pretty stern absolutely not you can't do this study and it came down, it came down the pipe from farther up. So there are things like that that really impede the type of things that you need to show in order to be able to show progress and then you still look like you're on the fringes a bit. I feel like there's incredible scientific potential medicinal potential that we really really owe it to ourselves to explore and then also I kind of tend towards the libertarian side of the political spectrum and I just have it just makes the hair in the back of my neck stand up to say why is this why do we have why are we prohibiting the substance. There is an IRS tax code provision called 280E and 280E came about in the 80s when a very specific Colombian cocaine drug at Kingpin was expensing expenses related to his illegal enterprise and the tax provision that was written was that if your expenses relate to a Schedule I substance you cannot take those expenses and so the impact that that has had on cannabis and businesses today is that they're allowed to take their cost of goods sold but not their payroll or operating expenses and so it changes their tax rate from 28-30% to sometimes as high as 80 or 90% and it's just wrong. It's crippling to its problem so it really is. Sunday morning attackers took down both MJ Freeway's production and backup servers causing an outage for all our clients. I am incredibly sorry for the impact this has had on your businesses. Keeping our clients data secure has always been a top priority. In January we were the victim of a cyber attack. Our systems were hacked and it was truly devastating to the company and to our clients. Our team rallied to a humbling and awe inspiring degree truly but I certainly had that moment in the hours and days following that attack of saying I, thinking to myself I don't think we can come back from this. We did have two employees leave within two days after the attack because they didn't want to be here anymore but all the rest of it. Two out of 80. Everyone else buckled down and worked amazing hours and shifts and it was incredible. And our clients stayed with us too. We've only lost some. Many of those have since come back. They had tried to competitor for a couple months and then came back to us and the vast majority of our clients stayed with us. So I feel truly blessed to have great clients as well. They stayed right involved. They stayed right engaged. They're openly communicating and they've stood right up and said that we are the first to innovate but we're also the first to stumble. I mean we're not perfect. We make mistakes and software is not perfect. There is no business that is. But you lead by example. And I think that that gives a lot of confidence in the employees and the team members themselves because you don't have people that are standing behind the scenes. They're right out in front. You lead from the front. So thinking about the future, I mean I think for us one of our, kind of our path has always been to make sure that the company is as powerful as possible, that our reach is as extensive as possible by the time there's a change in the federal legislation. So that's really our moment. That's our inflection point for the future of the company and that's really what we're driving towards now. I think our inability to raise money back when we first tried to raise money in 2011 was a failure that has turned out to be incredibly invaluable to us over time. So because of that we were forced to take all these additional risks and to double down personally and loans and et cetera. But at the end of that we turned this company profitable in two and a half years which is very impressive. Paid back all of our loans within another year and ran the company profitably for another year before we accepted VC capital. And as a result of that we've been all the way through series B financing while still retaining over 50% of our company and that's really unheard of. Absolutely. And we would have taken the capital in a heartbeat back in 2011 and we would have a fraction of the ownership of our company today. As part of the industry it's incumbent on me to share what I can to help make sure that we're all successful. I really like feeling like I'm on the cutting edge, feeling like I'm making a difference. And what we're doing as a company is pushing this effort forward. We're getting to do our dream jobs. I love what we're doing and I love our team and I just hope we get to continue doing it.