Last week I had a conversation with one of the founders of MJTK. For context I’m very active in the tech startup space and through my network I got connected with these guys. I did not contact them under the pretense of being an investor.
I discussed with them Citizen Toke and to a lesser extent Kush Moji (a separate company that has close ties to MJTK), the origins of both, progress to date and the forward looking opportunity. I did not discuss any details about financing, the stock, share structure … etc.
Opportunity: limited and antiquated marketing tactics for dispensaries
Dispensaries are becoming densely populated within legalized cities, resulting in elevated competition and fragmentation. While the dispensaries are incredibly profitable, they are extremely limited with the means to market themselves and create a brand for increased growth. The two dominant channels for customer acquisition (Facebook and Google) have both excluded any service for cannabis related companies. The net result is that dispensaries heavily rely on paper flyers for new customer acquisition. Paper flyers. In 2017.
With this in mind, MJTK is developing platforms and tools for dispensaries to effectively market and drive customer acquisition, in a highly competitive and profitable space.
Citizen Toke’s value proposition: rich, time-based and geo-targeted deals
Citizen toke creates value for customer establishing a central destination to find engaging, rich offers that are geo-targeted and time limited. Think gamifiied version of Groupon for MJ deals.
Unlike Groupon, however, Citizen Toke won’t require a massive operations team to create and publish the deals. MJTK provides the dispensaries an admin tool where they can create and schedule these deals. This platform is also designed to scale quickly across cities and states.
Traction to date
First, I’ll start by saying growing two sides of the market is one of the most challenging (and lucrative) business models to establish. To this end they’ve already made impressive progress. My contact could not give away the actual number of dispensaries and customers signed up to their beta, however, he did say based on the numbers he’s looking at the company will be profitable day 1.
Important to realize how significant this is. I don’t know of any tech startup that’s profitable in such an early stage. Amazon is yet to turn a profit, but their continued growth and trajectory give them a huge multiple. My startup is probably 5 years from being profitable, but we’re backed with millions from top tier VCs. The fact MJTK can be profitable so early with a tech solution in the emerging MJ space is fantastic.
When I asked how many customers have signed-up my contact just laughed and said those numbers were confidential and couldn’t provide, but he did add that they were ecstatic about the volume of sign-ups to date. Additionally, he commented that Citizen Toke is one of those rare products that just has immediate appeal and traction. Apparently, they’ve been swamped with tremendous interest not only from customers, but also from partners and institutional investors.
As for the dispensaries, they already have all the top ones lined up within Denver and that’s where they will concentrate first. After a few months they’ll begin their expansion to other cities. Again, with their platform in place they should be able scale and expand quickly.
I further inquired about any partnerships / influencers he can speak to that might be interesting to work with. He wouldn’t say explicitly, but was extremely giddy. He said they have some amazing connections in place with very well known names. He kept saying “I wish I could tell you. It’s just killing me I can’t.”
Need for investment:
I asked if they would be looking to get more investment to fund the growth efforts and if there was any way I could involved as an angel investor. First, he kinda chuckled and said they’ve been getting a tremendous amount of interest from investors, but they’re fine on capital at the moment. He also said I could buy the stock on the OTC and pointed me in the direction of Kush Moji, should I want to be an angel.
I obviously knew the stock was available on the OTC, but just wanted to see what his response was to getting additional investment and capital. I was very pleased to hear they’re focused on the product, have capital in place to fund their business and that they are not looking for more funds at this time. I read from this as focus on growing a responsible business that is shareholder friendly.
Development on product:
Currently, the team is working expeditiously on the development of their platform, and getting it to point where it can facilitate scale. Remember, this isn’t just a website or a low fidelity prototype. Developing production level code for high-volume traffic / transactions is a time consuming build. They expect to have this complete in a couple months.
Side note: Patrick Burke (who was also the product manager for Kush Moji) has been spending time on working on both companies, but is now transitioning full time to Citizen Toke, given the demand and traction.
I mentioned (casually) that I took a peak at MJTK while we were talking that it appeared some investors are getting anxious about not receiving an update. He essentially said, yeah we understand. They’re working day and night to launch the product. That’s their #1 priority. He said an update will be given soon, but apparently they’re just waiting for something to be confirmed. Not sure what that is, but it sounds like a PR should coming imminently. When speaking on this topic he also emphasized their focus is building a sustainable and successful business. They’re not in going to throw out updates and PR frivolously.
Dispensaries, while highly profitable, are eager to drive further customer growth but are extremely limited in the ability to do so. Citizen Toke addresses this need and is well positioned for immediate and explosive growth through it’s unique value proposition, partners, and early traction with both customers and dispensaries.
The company is investing time and resources into building a solid and scaleable tech platform – with this in place they will be able to scale the business rapidly.
They have a lot of users and dispensaries already lined up. The business is real and the team does not appear to be interested in driving up hype only to dilute. These guys are hungry and want to develop a truly great product for the industry. This is also a highly profitable business to be in.
Update from management should be coming soon! Exciting times here. We’re in the ground floor and doors for business will be opening very soon. When this launches it is going to be explosive.