Seeking Advice, Please Help!

CannaBusiness
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Hi Everyone,

I made this account so that I can stay anonymous, as a few members of this forum know me in person and know my real account name and I’d like to keep this on the down low… but I need advice!

Now getting that out of the way, here is my situation…

I started a THC remediation company about a year ago with the intention of doing tolling contracts. I was able to start this company debt free without any personal guarantees, which was very lucky!

However, we opened our doors right as the market began to crash, and were struggling to get traction and most importantly we had a hard time finding paying customers.

That business, which I started with my partner and long-time friend just “failed” about a week ago.

However, about 2.5 weeks ago we had in investor approach us. He had just recently sold 49% of his business for a LOT of money and was looking to get into the THC remediation business.

This gentleman is offering $1,000,000+ to buy us a new building, get a build out done, buy equipment, and buy material (crude oil) and get a small marketing team together so we can sell our own product instead of chasing tolling contracts.

This is how the structure of the company would look with the new investor…
My partner and I each split 10% equity (5% each) and we will receive $60,000 per year salaries for the first year. Every year as long as the company is hitting its milestones then my partner and I’s equity will increase from 5% to 25% each making the final structure 50% for my partner and I and 50% for this investor. That is the gist of that deal, we do 90%+ of the work in this operation and will be working at minimum 6x per week at least 12Hr per day, and that’s only in the lab and does not include outside work/meetings.

Then around the same time another opportunity arose with the company that manufactures some of the equipment I’ve been using in the lab. They love me over there for some reason and they offered me a technical sales consultant position… Base salary is $90,000 with minimum commission 45K with no cap on that end. One of the other guys working this job said he made 200K last year with his commissions. That job comes with the salary, stability and all the benefits you’d want. I would have to travel to different states about every 3rd week in order to go meet different customers and find new leads etc.

The other tricky factor that is at play here is that I am the “scientist” of the team between my partner and I, and the investor is only willing to invest if I’m part of the company. So if I turn down the investor and take the job, the investor is out aand my partner is left high and dry as he doesn’t have the necessary “credentials” to really get the kind of job he deserves (in my opinion).

Now I’m at a crossroads, I am 23 years old and feel incredibly lucky to have such amazing options in front of me. My big concern is that the CBD market will continue to die a slow painful death for the next 12-18 months and Even with a lot of capital to back us up we might just fail again. I love entrepreneurship and everything that goes along with it, but right now I’m just coming out of a “failed” business from about a week ago and now it’s time to start fresh with another one… the concept is daunting because to be perfectly honest I’m exhausted.

In addition to already being exhausted from this venture, I am in the process of opening a real estate company with some of my family too, so my plate is full.

I don’t know what I want to do, take the “cushy” job, make great money for my age, slowly work on this real estate company and invest my surplus cash wisely? Or should I double down and bet big to win big? Or is there some angle I’m not seeing here where I can have a role in the company while keeping the job?

All of your insights and opinions are appreciated. I have to decide very soon!

TLDR;
Option 1: Start new Company with wealthy investor. Make $60,000/yr working 80Hr+/wk and running 90% of the business but have 5% equity with the ability for it to grow to 25% over a few years.

Option 2: take a technical sales job making $90,000/Yr with $45,000 guaranteed commissions and no commission cap + benefits.

*If I take option 2 then my partner is screwed out of option 1

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That’s a tough spot to be in. At the end of the day, you’ve got to look after your best interests. I think you’re right about the future of hemp. While it would be noble to help a friend out and potentially make some serious dough in the process, I feel the odds are stacked against you from the start. I would argue that you would not only give yourself a stable and secure income, but you may even be in a position to help place your friend at an established company through contacts made at your new gig.

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Option 2 imo, coming from someone in their late 30’s if you can build YOURSELF up as much as possible, you should. 135k is amazing, and if things go further south in this industry, you’ll have experience outside of it in manufacturing.

Sucks for your partner, but at the end of the day you gotta look out for your future.

That’s my two cents.

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That was just said yesterday. We see tons of threads like this right now. The heyday is over I think.

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Option 2 sounds far more legit and safe, financially speaking. Option 1 is working for yourself and not having to answer to anyone again (except the investor and your business partners of course) and working your ass in to the ground to do it.

With option 1 do you get to hire minions to do all the dirty work in the future? Working like a slave for 100k a year is not a very pleasant sounding life. Not to mention should you ever decide to start a family, you’ll be a nonexistent parent and partner. I speak from my own experiences and my own struggles with this. I love working for myself, but currently it keeps me busier then I have time for. So my wife and kids don’t get the family time they so deserve.

All that being said, you just need to look at the big picture here. And look at what your end goals down the road are.

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What method of remediation is or Will this company offer ?
What Numbers where used to calculate viability of this investor capital company

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That’s very true about getting him placed in an established company I hadn’t considered that!

Option 2 just sounds like I’ll have more free time to enjoy my life; but my only concern is it may be putting short term gratification over long term life satisfaction… of course that would all be assuming that my new Company succeeded… and the thing about that is that I believe in myself and my team to make a great product efficiently, my concern is that I don’t know if I believe in the CBD/Hemp market enough. It almost feels like I’ll be buying a scratch card and hoping for the jackpot…

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That there seals the deal in my opinion man

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I appreciate your input, I definitely hear what you’re saying about building yourself up… but as I mentioned he’s not just my partner he’s one of my best friends and I believe it’s important to not only build yourself up, but to build those around you up too.

Of course it’s easier to build those around you up if you first focus on building yourself up… but I just don’t want to look back on my life and regret not taking this shot to win big either.

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Is there anyway you can stay an active consultant to the company you started with your friend?

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I would need to bring in another science person who could do the R&D in person and use me as a consultant basically. They could make my salary ($60,000) and have some equity :woman_shrugging: That’s not a bad idea, except I would need to find someone like that

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I guess let me re-phrase… I 100% believe that the CBD Market is going to continue to grow… but when will the market stabilize and can we survive that storm… that is more my concern.

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We will be producing pharmaceutical grade isolates CBG,CBD,CBN… remediating the subsequent mother liquor, redistilling it and saving it. We will then use CPC to remove the CBC, CBT etc from the “waste” and get those into pharmaceutical grade isolate form as well. We will then be offering “custom formulations” made to order of a variety of isolated cannabinoids that will be GMP certified. We will not be offering tolling and will be selling our own products. So I wouldn’t necessarily call it a “remediation lab”

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Thé market is not ready for those products
U take thé job at 23 that s a safe definite shot

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Take option 2. Get your partner set up in a more stable position. Stack your Bill’s and level up with real estate. Revisit the remediation idea in 4 or 5 years. You can small scale r&d with gains from the better job and possibly consult for equity along the way. Best to let the market floor settle more, establish a successful real estate company while that happens and at 30 you can have both?

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Can you take on an advisory roll with the investor AND take the other position? Or negotiate a referral agreement with the equipment manufacturer so you can represent them in some capacity?

Help build “option 1” company with an exit strategy. Negotiate an employment agreement with the option to purchase equity or convert your compensation to equity if the market stabilizes.

Outfit “option 1” facility with equipment from “option 2” company that you represent. Demonstrate your value to them by generating revenue quickly.

Ultimately, the more you can offer, the more value you bring to every opportunity. Real estate is another valuable credential.

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As an advisor, you will want to provide a “Scope of Responsibilities” document as part of your contract. Staffing and training is a valuable component of building any company and will provide you more leverage in your negotiations

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Thats a hard one, another thing to consider is that investors (at least good ones) invest in people, not ideas. And any smart investor understands the risk of the canna/hemp industry now. So if this company goes under (as 90% of startups do) there’s a big chance they’ll fund another of your ideas.

You’re young, def young enough to take big financial risks (and if you dont go into debt its not that big a risk anyway). If I were you I’d take the investor money BUT if I were me, (mid thirties, 1 kid with another in the cooker) I’d take the stable gig.

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If I were to take option 1 and things go well I would be able to hire a “minion” to replace myself and work a more normal schedule. If things go well my salary will go up, my equity will go up I’ll get benefits, everything will be awesome!

Of course if everything goes tits up I’ll be kicking myself for not taking option 2 :woman_shrugging:

I will definitely be working myself into the ground with option 1, if I’m working 80+Hrs/week for 60K I’ll be making $15 an hour… but that’s unimportant in the grand scheme of things if things work out

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That’s my thought is that when would I have another opportunity like this in my life? A good job is probably more likely to come around again than an investor looking to throw $1,000,000+ into you… but at the same time the thought of running a $1,000,000 lab sounds exhausting (but I think I might just be a little burnt out from this last venture)

I just wish I had a crystal ball… If you would have told me 15 months ago these would be my current choices I would be stoked but right now this stuff is keeping me awake at night.