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Getting products from manufacturers to stores is a crucial but overlooked part of many industries.
Often, specialized companies, known as distributors, emerge to handle this task. But in the cannabis industry, most brands have been distributing products themselves.
In 2017, two engineers who'd worked at Microsoft and Facebook saw this as an opportunity. After years of working in Silicon Valley, Vince Ning and Jun Lee started Nabis, which they've since built into one of California's top cannabis distributors.
"We wanted to build a really scalable platform so as many brands as possible could really launch and scale to meet all of this consumer demand that's coming in the next couple of decades," Ning said.
Nabis is now looking to dominate this behind-the-scenes sector of California's growing cannabis industry, which at $4.4 billion, is the biggest in the US, according to MJ Biz Daily. It just raised a fresh $23 million to fuel this growth from investors like Liquid2 Ventures — the venture-capital firm managed by the former football player Joe Montana — and Stanley Tang, the cofounder of DoorDash.
Ning told Insider that the company began to put together the round in late February and saw ample interest from investors.
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Nabis' growth from scrappy startup to major force in California
Nabis ships $350 million worth of cannabis products per year from more than 100 brands to stores. The company estimates that it handles around 10% of the cannabis products in California.
The company came from humble beginnings: Ning and Lee started the business by driving some of the delivery trucks themselves, in part to familiarize themselves with the industry and in part to fill in for roles as the business grew.
The startup now employs about 175 people, around two-thirds of whom deliver products or work in the company's warehouses in Los Angeles and Oakland.
The company is planning to double its footprint in California and advance its tech offerings
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Ning said his plan is to double Nabis' reach to handle 20% of the products in California's cannabis market in the next two years. He also plans to continue to develop tech tools that provide compliance, logistics, financing, sales, and marketing. Ning said he wants these offerings, which all launched within the past six months, to become larger portions of the company's revenue in the future.
Nabis is also looking to expand outside California as more states legalize cannabis, Ning said.
The biggest opportunity is persuading more cannabis companies to use Nabis
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Companies like LeafLink and Herbl offer similar tech and distribution services to Nabis. But Ning said the biggest opportunity to grab more market share is to win over the cultivators and manufacturers who still directly distribute their own products to stores.
Ning estimated that these self-distributing cultivators make up about 50% of all the cannabis distribution in California, while the remaining 50% is handled by third-party companies like Nabis. And though that share might seem significant, Ning said that when Nabis started, almost 100% of brands were distributing their own products.
"The big opportunities still remain within self-distributing operators," he said. "It's a rapidly converting segment of the market."
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