Smoke’s First Fire: Welcome to California

Well, it’s been an eventful 72 hours and the #WoolseyFire is still burning.  First, I want to acknowledge we are extremely fortunate.  My family has suffered no injuries or property damage to date.  Our experience with the fires has been more of an adventure, while I have seen friends, associates and strangers suffer greatly.  We’ve had a ton of people checking in on us so I thought I’d give a quick recap of my first California fire experience since moving to Los Angeles from Indianapolis earlier this year.  For the record, we have tornados and really crazy thunderstorms in Indy, but nothing like this fire.

It’s 7:48pm PT, I’m sitting here at home in Westlake Village under mandatory evacuation and prepared to leave again at a moments notice.  We are monitoring the Ventura County Fire alerts & radio chatter, Twitter has been our best source of information, albeit requiring tremendous filtering of nonsense posts. The TV news has been recycling video for days in creative yet misleading ways, making it hard to tell new events from prior ones.  We are surrounded by fire zones.

#WoolseyFire – from Simi Valley to Malibu . Blue Dot is our house in Westlake Village

#WoolseyFire – Blue Dot is our house in Westlake Village. Red lines are mandatory evacuation areas. Purple is fire areas.

Another map showing the fire zones and Westlake Village

 

 

 

 

 

 

 

 

 

 

 

 

The losses to the Southern California community are staggering, yet amazingly thus far mostly relegated to property and hardship. For the scale of this disaster, the limited loss of life has been a blessing and a testament to the Fire and Safety professionals getting ahead of it.
That said, this does not diminish the emotional hardship I’m seeing everywhere for personal losses.

 

We began this journey Thursday when upon returning from meetings in downtown L.A., we encountered highway closures just beyond our exit and the resulting logjam of everyone trying to get off at our exit, Westlake Boulevard.  Joining friends at Tuscany Restaurant, we enjoyed discussion with fellow patrons, but it increasingly turned to what people were hearing re the fires to the East of us. We offered our home to colleagues who were being evacuated.   I discussed exits plans that evening with Anitra and we agreed to leave if mandated. After a couple of hours of sleep, I awoke with a start at 2:30am and decided to turn on the news. By 3am, mandatory evacuation orders were issued for our Westlake Village. Go Time!

Even though I’m one who plans for emergency situations, knowing a fire may be imminent created a little bit of a scramble out the door.  As you should expect from an Eagle Scout, my go bag is always ready, with ample supplies of first aid, water treatment, weapons for self defense and other survival gear. I always think about how to survive for a week or more without civilization (hotels, stores, water, power) if on the road and for a month if bunkered in at home. [NOTE: If you do not have such a plan I suggest you consider it. It does not take long without power, food or water for the situation to cause people (especially crowds) to behave badly.]

On the other items front, we didn’t do quite as well.  E.g.,we later discovered that I had 9 pairs of underwear and one shirt (the one I was wearing), while Anitra had 14 shirts and one pair of pants (the ones she was wearing).  LOL Funny moment.

At 3:30am on Friday morning, we evacuated.  At that time there were fires to the East, North and West. I expected the 101 to be jammed up and fires were threatening to jump it by then.  Thus, I chose to head out via Westlake Blvd over the curving roads to Malibu and then down to Santa Monica. I figured this would be the least traveled most accessible escape route.

4am evacuating… no not happy

The 101 was closed in both directions from Westlake Village at the time of our evacuation

Over the hill in Malibu and headed to Santa Monica

 

 

 

 

 

 

 

 

 

 

 

It turned out to be true and we made it to the Santa Monica JW Marriott by 4:45am.  The hotel was sold out that night but I was fortunate to book a room for Friday night and after huddling around the fire pit for a few hours, we were checked in by 10am Friday morning.

Luckily, we left Malibu on the same route ahead of this now famous scene:

Photo of masses of people evacuating Malibu later on Friday after we had made the trek. Photo credit unknown.

 

Evacuee at the JW Marriott – yes lucky and blessed. In the words of one of my favorites, Tom Petty “You don’t have to live like a refugee”

This became our home for the next 36 hours.  It was eerily perfect, sunny, warm and no sign of the massive disruption happening nearby other than our fellow fire refugees we met.

On Saturday, the winds shifted and Santa Monica became smoky and unpleasant.  Anitra’s history of asthma was on our mind as we exited and headed toward Sherman Oaks where friends offered their home.  On that front, we had nearly a dozen offers of places to stay with our wonderful community of friends and family. It was amazing and heartfelt from many friends giving us another reason to give thanks.  As we came over the hill towards the Valley, it became clear that the air was anything but clear. The shifting winds had brought heavy smoke.  At this point, we had heard from several friends who had remained in Thousand Oaks & Westlake Village who told us the area was clear, even though the evacuation order was (and is) still in effect.  We decided to go home to at least grab other supplies (clothing) and at best stay put (we did).

 

 

 

My friend and colleague who stayed behind in Westlake Village sent me these shots of the fires burning in our neighborhood on Friday:

 

Today we rode bikes to survey some of the damage and view the situation live.

 

Smoke reporting from Westlake Village during the #WoolseyFire from J. Smoke Wallin on Vimeo.

I learned from my neighbor, a veteran of the 101st Airborne (thanked him) who has lived here since 1985, that where we are in Westlake Village is uniquely sheltered and the fires historically have gone around us. The winds also made the air here much clearer than I expected.  We had a blue sky sunny CA day today.

We remain vigilant and ready to leave at a moment’s notice.  I have great respect for the heroes of this tragedy. The fire and rescue and police have done a remarkable job of fighting an unstoppable force of nature.  I grabbed this shot from a twitter post (source unknown) of some of these guys taking a rest after 48 hours of constant fire fighting.  Amazing dedication and perseverance.  We plan to find ways to support them in significant ways going forward.

From KTLA – photo of firefighters sleeping in place after 48 hours of nonstop firefighting. Heroes, every one of them.

I will update this with the next chapter when it unfolds, but wanted to share in the moment while its fresh.  Thanks for sharing with me, your stories, as well.  As Anitra would say, we are blessed and lucky.

CNBC’s Fast Money with Smoke Wallin re Branding Cannabis, Wine & Spirits and Market Observations

Thanks to CNBC and the Fast Money crew for a fun interview on the state of the cannabis industry.

Cannabis industry exploding with growth here, says top pot exec

The cannabis business is growing like a weed, even as pot stocks see wild swings. With Smoke Wallin, Vertical Companies, CNBC’s Scott Wapner and the Fast Money traders, Pete Najarian, Tim Seymour, Karen Finerman and Guy Adami…

Smoke Wallin on CNBC’s Fast Money

A few shots from the day at CNBC:
 

 

 

 

COURTNEY DORNE AND J SMOKE WALLIN JOIN VERTICAL COMPANIES EXECUTIVE LEADERSHIP TEAM

VERTICAL EXPANDS EXECUTIVE TEAM; CEMENTS LEADERSHIP IN LEGAL CANNABIS INDUSTRY

Courtney Dorne, J. Smoke Wallin bring significant executive experience in Food and Alcohol Beverages to one of country’s leading medical cannabis companies

Los Angeles, CA (January 25, 2018) – Vertical, one of the country’s leading vertically integrated medical cannabis companies, announced today the addition of Courtney Dorne and J. Smoke Wallin to their leadership team.  Dorne is an entrepreneur and food industry leader who joins Vertical as a partner and President of Vertical Brands Co.  Wallin is a serial entrepreneur and thought leader in the beverage alcohol industry and has joined as a partner, Chief Marketing Officer and President of Vertical Distribution Co.

Vertical was founded in 2014 by entrepreneurs who saw the potential created by the transition of cannabis to a legitimate and legal business. Drawing from results-driven expertise in a variety of industries, the Vertical team has a synergistic energy that offers proven experience from seed to sale.

“I’m thrilled to welcome Courtney and Smoke to our executive team,” said Todd Kaplan, Founder & CEO of Vertical.  “Smoke’s deep knowledge of alcohol distribution and scaling new businesses in highly regulated industries, combined with Courtney’s perishable food distribution and extensive network strengthen our competitive advantage in the rapidly evolving legal medical cannabis industry.”

According to The Arcview Group, the U.S. legal cannabis industry represented over $6.7 billion 2016 and is expected to grow to between $22 and $50 billion over the next 10 years. Legalization of the medical cannabis industry began in 1996 with California’s passage of the Compassionate Use Act.  Since then it has operated in a quasi-legal environment with conflicting laws throughout the land, while growing exponentially.  2014 marked the beginning of adult recreational cannabis legalization with Colorado and Washington leading the way.  Today there are 29 states that have legalized either medical only or medical and adult recreational cannabis production, distribution, retail and consumption.  Gallop recently reported 64 percent of Americans support cannabis legalization nationally. In this vibrant space, Vertical is a pioneer and is the first to offer fully integrated services from legal compliance and operation of cultivation to extraction, product development and marketing.

Dorne brings literally a lifetime of experience in food services and the restaurant industry to Vertical. From her family’s restaurant to founding the giant Fresh and Ready Foods, Dorne has a proven track record in food manufacturing and perishable packaged food distribution and has built an extensive network of customers ranging from airlines and hospitals to convention centers, the military and convenience stores, all the while working under the rigorous scrutiny of FDA and USDA regulations.  She is a member of the YPO Global One chapter and is the current Chair of the Women’s Network (WYN).

“After years of suffering from debilitating pain and crippling migraines as a result of extensive surgical procedures, I learned first hand about the efficacy of cannabis on pain management,” said Dorne. “All too often our culture is quick to treat pain with a pill and we’ve all seen what that has gotten us. I believe that legal cannabis can be a part of a legal, safer and healthier alternative and I’m thrilled to join the team that can help make this happen.”

Wallin comes to Vertical by way of Taliera, a company he founded in 2005 to create, acquire, manage and advise brands in the beverage space. His career in beverage alcohol has included serving as Chairman & President of the Wine & Spirits Wholesalers of America (WSWA) and EVP and CFO for National Wine & Spirits (now part of RNDC/Breakthru). He is also active in YPO as Chair of the Beer, Wine and Spirits Network and has been active in legislative and regulatory affairs.

“I have always loved innovating, doing deals and building enterprises to scale, particularly in the beverage alcohol space,” Wallin said.  “I’ve been studying high potential growth brands and companies, and Vertical and is at the forefront of the rapidly growing legal medical cannabis industry. Both industries are highly regulated and for some time I have been expecting them to converge. The recent investment by Constellation Brands[STZ] in Canada’s Canopy Growth [WEED] validated my premise, and I couldn’t be more excited to be part of the team building brands and distribution in a market worth $100s of billions globally.”

Wallin continued, “I can’t help but think of Sam Bronfman in 1933 at the Repeal of Prohibition who went on to build Seagram into the alcohol industry leader it became before selling to Diageo and Pernod Ricard. Vertical is positioned to achieve that level of success.”

About Vertical™

Vertical is one of the first and largest vertically integrated companies in the legal medical cannabis industry. It’s operations in CA, AZ and OR combined with strategic partnerships in CO, MI, and NV position it well to take advantage of the rapid legalization and normalization of cannabis globally. Vertical is led by an executive team of entrepreneurs and business leaders from the alcohol beverage, agriculture, CPG, distribution, entertainment, food and medical industries. Vertical’s operations include planning, permitting, development and operation of cultivation, extraction, manufacturing, distribution and retail facilities.  It has world class capabilities in product development, co-packing, branding, marketing, education, and legal compliance, Vertical does Everything Pertaining to Green. For more information visit www.vertcos.com.

RE: Is There A Craft Beer Bubble?

Craft Beer Bubble? May 2015

Fortune Magazine published a story by Chris Morris  May 14th that is getting a bit of attention, posing the thoughtful question: Is craft beer in a bubble?. The New York Times  published Craft Beer Is Booming, but Brewers See Crossroads asking the same question on February 4th.  I am now getting this question quite frequently from my friends both inside and outside the industry.  I’m in Chicago at the National Restaurant Association Show #NRASHOW and this was a hot topic last night over cocktails. 

It is particularly relevant given the amount of new outside money (many of my YPO and friends from other industries are investing in local breweries and increasingly distilleries.)  I read the statistic that there is a new brewery opening on average every day in the US this year.  In Fortune, they increase this by end of year to every 12 hours.   This statistic is a bit alarming on face value, but let us dig a little deeper.  To answer the question, one must answer two others:

1. Market Growth: Where is the market going – meaning is the growth in craft share going to continue and to what level?

2. New Capacity: Given the market assumptions from #1, can the size of the market absorb the growth in total capacity?

Market Growth:  First, a little perspective:  In craft beer boom 1.0 (circa mid 1990s), Chris Miller correctly points out there was a slow down in late 1997 and then flat to low growth for more than a decade before the current much larger boom.  My company at the time was actively investing in and building multiple craft beer brands both on the distribution front in Chicago (Goose Island, Sierra Nevada, Pete’s, Bells) as well as regionally/nationally (Goose Island, Rogue).   Fortunately, we also had a healthy import business (Grolsch, Staropramen, Tennant’s) that continued to boom during the slowdown.  At the start of the current boom, we helped Flat12 start-up in Indianapolis and acquired Napa Smith Brewery in 2009 (sold in late 2012).   There is very little comparison this time around from the 1990s.  The degree of craft beer penetration into the beer market is fundamentally different.   It is much deeper and wider, and is touching every market in some way.  That said, the current level of craft sales as a percentage of the beer market is still quite small nationally (11% of volume according to the Brewers Association) vs in select highly developed craft beer markets (Portland, Seattle, San Francisco, Denver).  That number has roughly doubled in the past 5 years.   I predict craft beer sales will double again and exceed 22% of the US beer market by 2020.  This mean approximately 22 million barrels of new craft sales on top of the existing 22 million.

(NOTE: one aside/caveat: craft beer is narrowly defined as independent brewers excluding cross ownership by larger companies in the alcohol industry.  This is more political than it is any reality with consumers.  Therefore the current share is actually a bit larger than 11%, adding in brands from companies like Goose Island and Craft Brewers Alliance (ABI).  My 22% number includes craft taken over by larger brewers).

New Capacity: This is where the “new brewery every 12 hours” statistic is not the most relevant one.   The important question is how much new capacity is actually being added to existing breweries combined with new breweries?  95% of the new breweries (and existing breweries) are more like restaurant businesses with a touch of manufacturing, than they are breweries.   They will never sell any meaningful volume outside their four walls of the tasting room.  There is nothing wrong with a local brewpub being a go-to stop for local people and there is clearly a market for this form of on-premise account.  The real question is how much capacity are the production breweries adding and how many of the start-ups actually believe they are going to sell beer outside their four walls.  This is where the true competitive dynamic in the marketplace will come into play.  Most new breweries that intend to go to market through distribution and retail will fail.  This is not because they have bad beer (some might but will die quickly) but rather they cannot make their brand relevant to the consumer in such a crowded field.  This lack of differentiation and branding will prevent them from having any meaningful distribution and retail penetration.

The lack of experience in running a full service brewery with a restaurant, attached to a major manufacturing operation, attached to a distribution business, attached to a consumer marketing company will be the downfall of many.   Here at the NRA, the 1000’s of operators can attest to the competitive nature of the restaurant aspect alone.  There are a lot of smart investors in restaurant companies that have leadership teams with deep experience fighting hard for their share of the consumers’ purchasing dollars.  Breweries that want to scale must both run a brew pub that competes with them and figure out how to sell in their beer to a limited number of tap handles available.

 

 

My conclusion as of today: The market can absorb many more breweries and capacity than exists today.  The ones that remain focused on serving their local clientele will have the best chance of success.  The ones that enter the fray of production and distribution will enter one of the most competitive and tough businesses that exist.   Those that do not bring an experienced team, significant capital, creative and compelling branding and distribution to the table will fail.  There is a bubble of inexperienced entrepreneurs combined with inexperienced investors who are entering the market.  I look forward to the shake-out and the opportunities it will create for those prepared. In the meantime, I love capitalism at work and entrepreneurial spirit the craft beer market is demonstrating for all to see.

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