Why Cannabis: A Digital Summit Highlighting Y Combinator Cannabis Portfolio Companies

At the beginning of the COVID-19 pandemic, Meadow hosted an invite-only digital summit called Why Cannabis with 100% of funds going to raise money for Last Prisoner Project to support those who were unjustly punished by the War on Drugs. This historic event brought together a selection of founders of Y Combinator cannabis portfolio companies and investors to showcase our unique technology and innovative solutions to streamline this emerging industry.

In the winter of 2015, Meadow was the first cannabis startup accepted into Y Combinator (the prestigious tech accelerator that has helped create household names like Airbnb, Reddit, Dropbox, Instacart, and Coinbase).

Since then, YC has gone on to back a unique cohort of startups, each creating singular solutions for areas of this new industry like genetics, cultivation, distribution, retail, and building brands. Together we represent a unified front and a more complete picture of what this emerging space looks like. We believe that together, we are building an industry that truly has the potential to change the world for the better. We're grateful for the contributions, stories and business insight that was shared during this event from the founders ofRevGenomics, Nabis, California Dreamin', Flower Company, Canix, and Confident Cannabis.

Thank you to investors Emily Paxhia of Poseidon Asset Management and Ba Minuzzi of Umana Family for moderating our two panels about supply chain operations and building a modern cannabis brand.

Across California, the momentum is building to finally implement social equity programs to give back to communities who have been harmed by cannabis enforcement practices.

In 2020, cannabis was deemed essential business in the state of California, and it's essential that we release the 40,000 Americans in prison for cannabis violations that are no longer illegal. It's essential that the entire cannabis industry continues to work together to find community-oriented solutions to support those affected by the War on Drugs and its disproportionate cannabis enforcement practices created multigenerational trauma, incarceration and oppression of Black and brown communities all across America.

This event was a fundraiser for Last Prisoner Project because as we forge ahead with this exciting new industry, it's important to remember the historical context of cannabis — it's inextricably tied with racism. As cannabis CEOS and investors, we all have the responsibility to continue to use our immense privilege to support those who were unjustly punished by the War on Drugs.

Q&A with Y Combinator Partner and CEO Michael Seibel with Meadow CEO David Hua:

David Hua: I'm honored to welcome Y Combinator CEO, Michael Seibel. Thanks for being here, man. I'm happy to help. I appreciate it. So we got 20 minutes and we're going to go into some of the learnings and that we've gotten from, from Y Combinator. So, you know, as we begin, I'd love to hear your, why cannabis story. Why did you take a chance on cannabis back in 2015 when he accepted meadow into wine?

Michael Seibel: Yeah. So I think what's so much fun about YC is that we get to see trends very early. And I think that by 2015, it became clear that a lot of people who understood cannabis well could kind of see the long trajectory and could see that we were kind of going to be emerging into a decade or two of significant change.

And they started applying to YC. And when we see this in any, any industry, whether it's mobile products or crypto, it's fun to work with them and to see what will happen. And so I think what was really cool was that new, you guys saw this arc changing and you guys were also a very technical team. They're trying to build software to attack the opportunity and that lines up with everything that we like it.

Yeah. Yeah, I'm, I'm appreciative that you let us in. What's your opinion on cannabis and how has that perspective evolved as you know, while in YC and in general and how has that shaped your view?

Michael Seibel: So I think that my original opinion about cannabis was more of a social justice topic.

It seems pretty stupid. The number of people that we are incarcerating. And I wasn't much of a user, but always supported legalization. I think that as legalization has started, it's been interesting to see how it's evolved. I use cannabis more now and kind of more functionally as opposed to socially.

And it's been interesting to see those use cases emerge. Like for me, it helps me go to sleep. And I think the other bit that's been kind of fun looking at this space is it's clear how early. It's clear that this is kind of still the ground floor. And so much work is left to be done on kind of making the industry and actual industry.

It's somewhat rare that you get like an insider's view on an industry that's being created right in front of you. You know, most industries have this massively long history. So I think that part has been even more enriching as I learned more about cannabis. It's like the future is still up for grabs in a huge way, you know?

David Hua: Yeah, I think we underestimated the time it would take for all of this infrastructure and all of these things to get built and how much investment of time, energy, and resources to get that done. It's crazy.

Michael Seibel: Yeah, because all of you here are inventing. Like, one day they're gonna talk about you all; now we're creating a second, third, fourth generation of weed companies because of the work that was done years ago. And you know, you guys will all be old and gray by then.

David Hua: Ha. Yeah. We'll see. It's gonna be exciting. Can you give me an overview of YC's history with cannabis? What have you learned by working with our portfolio companies here over the years?

Michael Seibel: I think there've been a couple of things. One, I think what's been interesting about YC is we've kind of invested on a lot of different parts of the ecosystem. You know, there are a couple of products: it's distribution, POS, compliance, wholesale. So it's been kind of cool to see companies attack all the different parts of the ecosystem.

You know, you mentioned time and I would say that that's one thing that I've certainly learned a lot about is how much time and energy it takes to get this industry up and running, because there's a physical component to it. In addition to a software component to it, it's important that the founders who are working on it are even more irrational in how much they care.

And it's interesting that we've been able to collect a group of irrational people to invest in. It's really clear that there's going to be a massive multi-billion dollar industry. That's nationwide. But damn, it's hard to predict the short-term stuff. And it was funny cause I remember when kind of the first round of regulations were coming out and all the YC companies were just like, we don't know what's going to happen.

The instructions were being given seemed completely wrong and they all stuck with it. You all stuck with it. And I think that less passionate founders would have just encountered that moment and said, "I'm going to get out of this space."

David Hua: I remember when we were in the batch (and cannabis was still medical only in California), you were like, "why don't you just go and get this product and bring it directly to the person?"

And I was like, "well, they don't have a doctor's recommendation."

And you said "Well, what's the recommendation? Why don't you send the doctor over there?"

And I was like, "Okay, I guess that's what we'll do" (we then went on to launch Meadow MD as one of our earliest projects).

It's just so crazy how much has changed there. And I think one thing that I remember about YC is this cockroach story you told about resiliency in your mentality; just survive and thrive. Just stay alive and you'll be fine, which has definitely resonated with a lot of us here.

Michael Seibel: Ha, I think imagining yourself as a cockroach is not an inspiring message to about 95% of founders, but it's like a ridiculously inspiring message to about 5% of founders and those founders pattern match to being successful. Yeah. It's like, this is not a fun game for people who want success right away.

David Hua: No, no, it's definitely not. So, you know, you've just reviewed a ton of different companies for the recent YC batch. When you're looking at cannabis, how do you evaluate ideas or what are you looking for in this emerging industry, as you look into the future? Like, what are we missing or how do we look at what needs to be built?

Michael Seibel: So I think that YC tends to do better when we invest in the infrastructure, because we're not so smart about understanding exactly what consumers will want, but we are better at trying to figure out, okay, here are all the different types of products that will exist if the cannabis industry is large. And it's really that; that's one thing that we've thought about. We've made more bets on infrastructure and fewer bets on product. I think the second thing that's interesting to me is that, whereas I feel as though the infrastructure has evolved a lot, I'm not yet convinced that we are anywhere that we've, that we've hit the tipping point in terms of the products.

I think that the general kind of classic weed consumer who was probably buying weed illegally in the past is now much better served by the products that exist today. But I think that there's still this open question about what's the product that's going to break open the non-weed consumer.

And I actually think that's like a pretty exciting prospect. I think that, you know, the dominant social drug in America is alcohol. And I don't think America has particularly benefited from that; certainly there's been a lot of costs in terms of violence, drunk driving, and sexual violence.

There's been a lot of negatives associated with that. And it's going to be a really exciting to see a cannabis product that can basically really break alcohol's hold on the kind of social drug monopoly. And I think that now all the infrastructure is being set up. So when that product is kind of brought to them, it can grow really quickly. And maybe the difference is that five years ago, even if that product was invented, it would have been really hard to bring it to market in a big way. And so to me, that's the kind of still that exciting moment that requires a lot of innovation.

David Hua: Yeah. It reminds me of the JustinTV days where video game streaming, really streaming in general was nowhere. It was nothing until Twitch started finally happening, and now it just keeps growing. It's not even like peak.

Michael Seibel: Uh, it's a little weird, the parallel, because if you think about the Justin TV / Twitch story, for the first five years, we were messing around with the right use case, but we were building all the infrastructure, the video system.

And then when we had the right use case, video games, bam, everything clicked and that felt good, but it took five years. And so, you know, as those things come together and I'm confident that they will in the relatively near future for cannabis, there's just going to be this multiplier effect.

And I think if you kind of look historically at what the growth of cannabis has been, even though it's been good, it's nothing compared to what it was. When the kind of infrastructure and products match up.

David Hua: Yeah. I think we even got a taste of that during this pandemic with COVID when cannabis was deemed essential. It really just gave us all the green light to go while everything else was shut down. And all the infrastructure that we've built over the last, you know, six years or so were activated, and everything started going, which is so exciting.

Michael Seibel: Well, and can you imagine if you had had to do the same thing five years ago with the infrastructure of five years ago? It wouldn't have worked.

David Hua: Yeah, it's nuts. What are you most excited about for the future of this industry? Is it more of the brand stuff personally or more infrastructure? Because there's so many parallels. You have pharmaceuticals, alcohol, tobacco, brands direct to consumer, all the stuff that's swirling around that you see and can apply to cannabis.

Michael Seibel: So from the society it'll impact, I'm excited about the social use cases and the social mainstreaming of cannabis. From a personal perspective, I'm actually far more interested in the functional uses. You know, this is something that you and I have talked about a lot.

There are many different potential functional uses of cannabis. And I feel as though the kind of array of over the counter drugs that humans have access to right now are pretty poor. And I really actually am excited to think about all of the potential functional use cases for cannabis in my life.

And I think that we're in this time right now where productivity is almost everything and you're trying to squeeze out more minutes out of every day. And I think there are some interesting use cases for cannabis that can help people get the most out of their day, whether they're relaxing or whether they're wanting to accomplish something. And so I think those use cases are personally very interesting, but it's also funny.

Going back to the kind of societal use cases, one of the conversations that I know you and I have had, and I've had with a lot of my friends is now that we have kids, would I rather my kid go to a party with alcohol? It's so clearly weed. It's not even funny. And so I really, really hope these social use cases are in a great place when my kid is a teenager.

Cause I just think it's going to create a much better environment for young people.

David Hua: That's awesome. Yeah, this was great. I really appreciate the time. I mean, in many ways, YC and the partners have put their reputation on the line, backing these companies and being so ahead of the game. And it's been awesome to have that support.

You know, it really legitimizes a lot what we're doing and we're doing a lot to make you guys proud. And, you know, I appreciate just spending the time here for the first ever YC cannabis portfolio update. We're just so grateful.

Michael Seibel: Thank you for putting this together. And I got to say, we're not the ones doing the hard work. It's all you guys, so good luck. And we're here to help.