Jordan Tritt, CEO & Co-Founder of The Panther Group – Interview Series

As the American cannabis industry continues to grow exponentially to a nearly $29 billion industry in 2023, large investors and venture capitalists from a number of varied industries are looking to make notable investments in this nascent but usually thriving industry. For a better understanding of the complexities of investing such large sums into such a comparatively young marketplace, mycannabis.com had the pleasure of speaking with Jordan Tritt, CEO & Co-Founder of the The Panther Group, which specializes in connecting up-and-coming cannabis brands and companies with interested investors and other financial strategies.

What defining moments or needs of the cannabis industry led to the creation of The Panther Group, and what type of expertise does the team bring to the table?

The Panther Group is comprised of seasoned operators and investors with broad and diverse experience primarily within the financial realm of manufacturing, software, technology and business services. As active investors and board members, we identified early on the need for a broad lens informed by our experience operating within a variety of industries prior to cannabis. 

The website says the Panther Group has been investing and operating in the cannabis industry since 2014. What were some of the very first investments that the company made in legal cannabis, and is the consensus among the board that those investments paid off?

Since the beginning, our main investment thesis has centered around the ancillary or infrastructure aspects of the industry. We believed that investing in ancillary companies would be prudent for a few reasons, including less capital needs, potential utility outside of cannabis (increasing the total addressable market) and a customer base in the hundreds or thousands of businesses. Early investments included fin-tech and compliance, ad-tech, ag-tech, and hardware and software such as B2B wholesale and inventory management, learning management and data analytics. These companies have been able to grow with minimal capital infusions and have not had the downward pressure in pricing that plant touching companies have endured.

Of the 50 and counting investments that the Panther Group has made, what have been the most successful? Conversely, which of those 50 investments have been underperforming when compared to the other investments?

The most successful companies operate in a niche that has relatively less competition, such as terpenes and flavoring, B2B wholesale software, alternative medicine platform/marketplace, and vertically integrated plant touching companies in limited license states. Those that have underperformed have been cultivators, brands, marketing, data and tradeshows. They have either operated unprofitably and/or were unable to differentiate themselves to market and sell efficiently.

What are the most common issues that cannabis businesses face when securing proper funding/capital and investors? Why does that gap in access to investors exist in the first place?

The pool of investors is small because of the lack of capital from institutional investors, lack of public stocks due to restrictions from major stock exchanges and ongoing federal illegality. Investors at this point are less interested in the medium- to long-term outlook and are instead focused on proven, past results and getting a consistent and reliable return. The general underperformance of companies in the sector has also made it less enticing to investors. 

How does Panther Group vet possible investors and business owners to make sure the deal is viable? What are some red flags to look for from interested investors who ultimately wouldn’t make for a proper and reliable investor?

We come from the financial side and put emphasis on the numbers and the experience of the operator and team. We are looking for companies that have a competitive advantage, either in the quality of their products/services, or the size and scale of their operations. At this juncture, we are seeking companies that need working capital/growth capital and have a clear way to return capital and grow the business. Historically, with our first two funds, investors needed to have a medium-to long-term perspective because the companies were in the Seed or Series A rounds.

On the investor side, what is the most common professional profile of an investor that Panther Group would work with? What industries did these investors work in and usually made fortunes in previously? Do they live more in one state or another?

Now, with a focus on allocating debt capital, we are looking for larger check sizes from fewer investors, which has led us to focus on ultra high-net-worth individuals, family offices and registered investment advisors/private wealth managers with independent firms. These people are located primarily in major metro areas like New York, Chicago, South Florida, Southern California and Texas.

Has The Panther Group experienced blowback or any sort of retaliation from federal authorities due to its open association with the cannabis industry?

The blowback has been minimal. We had a couple bank accounts get shut down by banks that did not want to be associated at all with cannabis, but that has been it. 

If cannabis were to be successfully rescheduled from Schedule I to Schedule III, how would that impact the operations and services offered by Panther Group?

We would likely see more interest in equity investments and companies looking at going public or participating in mergers and acquisitions activity. The race to scale and unlock shareholder value would begin in earnest. Businesses would need to take into account what moves big pharma, tobacco, alcohol and mainstream CPG companies make. With the removal of the onerous tax impact of Section 280E, cash flow will immediately improve, and more traditional lenders like commercial banks will dip their toes into cannabis lending and increase the availability of affordable debt capital. Rescheduling will bring increased complexity and necessitate advising where and how to deploy capital to compete within a new national medical supply chain, i.e. pharma grade, FDA approved infrastructure and integration with traditional healthcare—including health insurance. Mainstream industries like big pharma, tobacco, alcohol and CPG with established distribution networks will create viable expansion and exit opportunities for cannabis companies—but also increased competition. 

Simultaneously, how would a federal rescheduling impact the clients and investors that Panther Group works with? Would their investing strategies or priorities change when that rescheduling occurs?

We are already expecting rescheduling to occur and therefore looking through the lens of what is viable medium-to long-term. As noted above, companies must have the team and capital resources to scale quickly and capital efficiently. Rescheduling puts cannabis on par with pharmaceuticals, which would entail more clients and investment into the medically focused aspects of the industry. They include research and development, and the creation of proprietary compounds and formulations targeting specific ailments and conditions that possess intellectual property (i.e., Epidiolex for seizures, etc.). Rescheduling brings along increased complexity and necessitates investment—a national medical supply chain requires investment in new pharma grade, FDA approved infrastructure and integration with traditional healthcare—including health insurance.  Ultra high-net-worth individuals, RIAs and family offices with the capacity and flexibility to enter will capture a significant upside while traditional investors will be held back by reputational risk and red tape.

Thank you for joining us, Jordan! To stay updated on The Panther Group, please visit it’s informative website.