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A former coworker has a relative who became a CFO at a Colorado dispensary. This was in the early days, and it was the wild-wild-west. Turns out employees wer

by chiph 9y ago

A former coworker has a relative who became a CFO at a Colorado dispensary. This was in the early days, and it was the wild-wild-west. Turns out employees were transporting the daily deposits in their car, and the business was storing it in some file cabinets in the office. Obviously not ideal. So he talked to a couple of armored-car companies about setting up a pickup schedule, and they wouldn't touch the business because they didn't want to take the chance that any dispensary money would get intermingled with regular banking money when in the back of their trucks, and thus invoke the wrath of the feds. Looking at the pile of cash they had, he just said "Why don't we just buy our own trucks?" and they set up a subsidiary that provides armored car services to the cannabis industry.

GuiA 9y ago
This is an amazing anecdote. Spinning up a side company to solve a need you have as a company that isn’t addressed by the market is the winning lottery ticket of entrepreneurship (you have validated the product/service because you need the product/service to conduct your original business, you are intimately familiar with what features you need to offer, how much you can afford to charge for it, etc)
- cabaalis 9y ago
  Also, "scratching your own itch" is always the best startup method because you know intimately if your proposed solution really is a viable solution in the first place. It's then just a matter of pricing and cost, rinse and repeat.
  - fineline 9y ago
    And execution. Knowing what you want doesn't guarantee you can deliver it. Otherwise your point (and parents) is a good one - certainly a good indicator that you might really be onto something.
- BookmarkSaver 9y ago
  This is basically how Amazon thinks (e.g. AWS, FBA)
  - dx034 9y ago
    I agree with AWS but how did FBA solve problems for amazon internally?
    - BookmarkSaver 9y ago
      You have it backwards. AWS didn't solve anything for Amazon internally (it's actually kinda funny how tricky moving internal systems onto AWS is). FBA and AWS are Amazon taking systems that they already had to build for its own use and selling them as a product/service to external companies. FBA is just a way to use a portion of Amazon's existing distribution system. AWS is a way to use Amazon's existing tech platform(s).
    - fencepost 9y ago
      One possibility related to commingled SKUs would be that they can control coverage of items in warehouses by controlling which warehouse(s) sellers and their product to.
    - uiri 9y ago
      Fulfillment solves warehousing, inventory, and delivery of Amazon packages. Amazon built out their own network. FBA is Amazon renting out that network to third parties - whether they sell on Amazon or on their own ecommerce site.
- JonCox 9y ago
  To bring it back to the article, it's a bit like how CannaSOS (think a mix of Amazon & Rotten Tomatoes for weed) are stepping up and developing a crypto token & platform specifically for the purpose of buying/selling marijuana.
- softawre 9y ago
  This is the story of Interactive Intelligence, a company I worked for long ago. They were going to build children's software, but had trouble setting up a phone system. So they decided to build phone systems, and later sold for 1.3B
amorphid 9y ago
My neighbor of mine used to work as a bookie, letting people make illegal bets on sporting events. He said the toughest part about his business was the piles of cash he had to manage. He said once you take in around $500K USD (or something like that), you have so much physical cash that it prevents you from scaling. He needed to keep the cash on hand to pay the winners, and getting robbed would probably have been fatal. That gave me a new appreciation for digital banking.
- Feniks 9y ago
  There's a reason why cash is so unpopular, nobody wants to use it anymore. The only people here who still use cash are those who have something to hide.
  - chiph 9y ago
    First off, everyone has something to hide. Otherwise people would be fine with allowing the police to randomly search their houses. See: Three Felonies a Day [0] A few years ago I went back to carrying more cash. I had realized that debt cards don't provide enough protection against the card info from being stolen (it could take a week to get your funds back). Credit cards have more protection, but after having to replace my cards multiple times, it was just easier to pay for my lunch and gas using cash and not have the hassle of contacting all my recurring payment businesses repeatedly. [0] https://www.wsj.com/articles/SB10001424052748704471504574438900830760842 https://www.wsj.com/articles/SB10001424052748704471504574438...
  - banderman 9y ago
    Lots of people use cash because it's better for the businesses that receive it to not have to pay a significant processing fee of 2%+. When a restaurant might only run on 5% margins, 2% off the top is 40% of their profits.
fragmede 9y ago
Similarly, now that cannabis is legal (for both recreational and medical use) in Nevada, companies that already handle large amounts of cash are well placed to take advantage of this. As it turns out, there's already a large industry that deals with large amounts of cash, which means there's a whole ecosystem out there that supports cash. That industry? Las Vegas Casinos.
- dragonwriter 9y ago
  > Similarly, now that cannabis is legal in Nevada Cannabis is no longer illegal under Nevada state law. As Nevada has not achieved independence from the US federal government, cannabis is not, however, legal in Nevada. This is important in he context of your comment because, given the history of the Las Vegas Casino industry, I don't think they would want to wave a red flag of what is—from a federal perspective—organized crime in the face of federal authorities.

by chiph 9y ago

GuiA 9y ago

This is an amazing anecdote. Spinning up a side company to solve a need you have as a company that isn’t addressed by the market is the winning lottery ticket of entrepreneurship (you have validated the product/service because you need the product/service to conduct your original business, you are intimately familiar with what features you need to offer, how much you can afford to charge for it, etc)

cabaalis 9y ago
Also, "scratching your own itch" is always the best startup method because you know intimately if your proposed solution really is a viable solution in the first place. It's then just a matter of pricing and cost, rinse and repeat.
- fineline 9y ago
  And execution. Knowing what you want doesn't guarantee you can deliver it. Otherwise your point (and parents) is a good one - certainly a good indicator that you might really be onto something.
BookmarkSaver 9y ago
This is basically how Amazon thinks (e.g. AWS, FBA)
- dx034 9y ago
  I agree with AWS but how did FBA solve problems for amazon internally?
  - BookmarkSaver 9y ago
    You have it backwards. AWS didn't solve anything for Amazon internally (it's actually kinda funny how tricky moving internal systems onto AWS is). FBA and AWS are Amazon taking systems that they already had to build for its own use and selling them as a product/service to external companies. FBA is just a way to use a portion of Amazon's existing distribution system. AWS is a way to use Amazon's existing tech platform(s).
  - fencepost 9y ago
    One possibility related to commingled SKUs would be that they can control coverage of items in warehouses by controlling which warehouse(s) sellers and their product to.
  - uiri 9y ago
    Fulfillment solves warehousing, inventory, and delivery of Amazon packages. Amazon built out their own network. FBA is Amazon renting out that network to third parties - whether they sell on Amazon or on their own ecommerce site.
JonCox 9y ago
To bring it back to the article, it's a bit like how CannaSOS (think a mix of Amazon & Rotten Tomatoes for weed) are stepping up and developing a crypto token & platform specifically for the purpose of buying/selling marijuana.
softawre 9y ago
This is the story of Interactive Intelligence, a company I worked for long ago. They were going to build children's software, but had trouble setting up a phone system. So they decided to build phone systems, and later sold for 1.3B

amorphid 9y ago

My neighbor of mine used to work as a bookie, letting people make illegal bets on sporting events. He said the toughest part about his business was the piles of cash he had to manage. He said once you take in around $500K USD (or something like that), you have so much physical cash that it prevents you from scaling. He needed to keep the cash on hand to pay the winners, and getting robbed would probably have been fatal. That gave me a new appreciation for digital banking.

Feniks 9y ago
There's a reason why cash is so unpopular, nobody wants to use it anymore. The only people here who still use cash are those who have something to hide.
- chiph 9y ago
  First off, everyone has something to hide. Otherwise people would be fine with allowing the police to randomly search their houses. See: Three Felonies a Day [0] A few years ago I went back to carrying more cash. I had realized that debt cards don't provide enough protection against the card info from being stolen (it could take a week to get your funds back). Credit cards have more protection, but after having to replace my cards multiple times, it was just easier to pay for my lunch and gas using cash and not have the hassle of contacting all my recurring payment businesses repeatedly. [0] https://www.wsj.com/articles/SB10001424052748704471504574438900830760842 https://www.wsj.com/articles/SB10001424052748704471504574438...
- banderman 9y ago
  Lots of people use cash because it's better for the businesses that receive it to not have to pay a significant processing fee of 2%+. When a restaurant might only run on 5% margins, 2% off the top is 40% of their profits.

fragmede 9y ago

Similarly, now that cannabis is legal (for both recreational and medical use) in Nevada, companies that already handle large amounts of cash are well placed to take advantage of this. As it turns out, there's already a large industry that deals with large amounts of cash, which means there's a whole ecosystem out there that supports cash. That industry? Las Vegas Casinos.

dragonwriter 9y ago
> Similarly, now that cannabis is legal in Nevada Cannabis is no longer illegal under Nevada state law. As Nevada has not achieved independence from the US federal government, cannabis is not, however, legal in Nevada. This is important in he context of your comment because, given the history of the Las Vegas Casino industry, I don't think they would want to wave a red flag of what is—from a federal perspective—organized crime in the face of federal authorities.