Exclusive Interview with Truth Enterprises President and CEO Ross Haley
Truth Enterprises, the parent company of lbs. Distribution is backed by a team with multigenerational cannabis experience and business acumen, according to President and CEO Ross Haley. Haley spoke with New Cannabis Ventures about the company’s B2B operations in California, a recent funding round and expanding capacity. The audio of the entire conversation is available at the end of this written summary.
A Background in Cannabis
Haley was born in northern California. He has been around cannabis for his entire life. He first entered the cannabis business on the ancillary side. When the ability to have a licensed business on the plant-touching side emerged, he took the opportunity.
He launched Truth Enterprises with his co-founders Jake Hendrickson and Sean Smutny. He and Hendrickson have been friends since they were young, and both co-founders have an entrepreneurial spirit. Hendrickson plays a significant role in cultivation, production and branding. Smutny is experienced in sales and brings a wealth of cannabis retail knowledge to the business.
The B2B Supply Chain
The Truth Enterprises team came into the industry with the intention of focusing on the B2B supply chain, from seed to wholesale. The company started cultivating in late 2017. It also has a Type 11 distribution license and a Type 6 extraction license, which it uses for R&D.
The company has a 55,000-square-foot facility in West Sacramento and a 40-acre farm in Yolo County. Truth Enterprises currently delivers products to more than 220 stores in California, according to Haley.
lbs. Distribution is the company’s forward-facing distribution brand, which handles the company’s house brands as well as third-party brands. The company distributes a comprehensive catalog of edibles, flower, prerolls and concentrates with brand names like West Coast Treez and PUFF prerolls.
M&A and Expansion
M&A has played a prominent role in Haley’s career; he successfully exited a number of ancillary businesses in the cannabis space. For example, he sold the fertilizer companies Vermicrop Organics and General Hydroponics to Scott’s Miracle-Gro in 2015. He also sold The GrowBiz to GrowGeneration in November 2020.
Haley views M&A as vital to growing a business beyond the scope of a regional operator. M&A is likely in the future for Truth Enterprises, but the exact type of deals and the timeline have yet to be determined. For now, the team is focused on the core infrastructure of the business in California.
With discussion of expansion always on the table, federal legalization is an important consideration. Haley talks about the regulatory landscape with his board and advisors, and the team will prepare to act when that change moves closer. For now, the company is focused on its day-to-day operations in California.
This summer, Truth Enterprises raised $11.5 million through an oversubscribed private placement. The company is using that funding to help grow its capacity. It produces all of its own products, as well as many of its third-party distributed products. The company also does some third-party white labeling. Having the necessary supply chain capacity and packaging capabilities are essential to the business’s growth, according to Haley.
Thus far, the team has been able to leverage its network of friends and family to raise capital. Haley had a positive experience selling Vermicrop Organics and General Hydroponics to Scott’s Miracle-Gro. As a part of that experience, he helped Scott’s Miracle-Gro make some acquisitions via Hawthorne, facilitating some successful exits. Some of the people Haley connected with during that time have become lead investors in his network.
The company had more interest than availability in its latest raise, and it is looking forward to doing another round in the near future to continue supporting expansion, according to Haley.
Truth Enterprises has halted bulk wholesale, instead, it is pivoting to focus more on branded packaged goods. The company will be looking to drive growth through expanded capacity, and it will be looking to create more efficiency around the packaging and storage of cannabis. Haley sees an opportunity to innovate around packaging and storage to give consumers a higher quality experience.
The company uses KPIs throughout its operations, but customer-facing metrics are some of the most important. The team focuses on the perfect order, quality control and maintaining strong relationships with its retail customers.
Competition in the space is growing, and more product in the form of bulk wholesale and packaged goods is available in the market, according to Haley. More stores are opening, so the company has more opportunities to form relationships. Plus, Truth Enterprises will be looking for ways to explore product innovation. The company will be focused on maintaining high levels of service to its retail customers and providing the right products at the right price.
To learn more, visit the lbs. Distribution website. Listen to the entire interview: