We caught up with the brilliant and insightful Nassir Silwany a few weeks ago and have shared our conversation below.

Alright, Nassir thanks for taking the time to share your stories and insights with us today. Let’s jump right into the heart of things. Outsiders often think businesses or industries have much larger profit margins than they actually do – the reason is that outsiders are often unaware of the biggest challenges to profitability in various industries – what’s the biggest challenge to profitability in your industry?

In the cannabis industry, one of the most significant challenges to profitability is undoubtedly the intricate web of regulations that envelops the entire business landscape. These regulations stem from the complex dichotomy between state-level legalization and federal illegality of cannabis, creating a unique environment where profitability is perpetually under strain.

The contradictory legal status of cannabis at the federal and state levels presents a myriad of hurdles that hinder the industry’s financial growth. The clash between state legality and federal prohibition results in a lack of access to traditional banking services for cannabis businesses. When it comes to dispensaries outside of the ancillary space I operate in, this forces these businesses to operate primarily on a cash basis, which poses security risks and complicates financial management, taxation, and the ability to secure loans and financing. Moreover, the regulatory landscape varies drastically from state to state, making it challenging for cannabis businesses to navigate and comply with diverse sets of rules. This inconsistency leads to increased compliance costs, as companies must allocate resources to adapt their operations to each jurisdiction’s specific requirements.

The issue of limited marketing channels and higher marketing costs is another illustration of the profitability challenge. Due to federal restrictions, many mainstream advertising platforms and channels are closed off to cannabis businesses, forcing them to rely on alternative, often costlier, marketing strategies to reach their target audience. This limited exposure can impede growth and make customer acquisition more difficult. The ongoing clash between legality at different levels of government manifests in various ways, including limited banking options, higher compliance costs, and constrained marketing strategies. These hurdles are not only illustrative of the challenges faced by cannabis businesses but also emphasize the need for regulatory reform to foster a more conducive environment for sustainable profitability in the industry.

Awesome – so before we get into the rest of our questions, can you briefly introduce yourself to our readers.

Hey, I’m Nassir Silwany, one of the Co-Founders behind Smoke Source and CaliConnected – your ultimate online hub for top-notch smoking accessories. On a personal note, you’ll often find me hanging out with my amazing family – my wife and partner in crime, Holly, and our two awesome kids, Tatum and Lucy. They’re the real stars that keep me motivated every single day. My journey after college took me through some solid years in retail before my business partner and I decided to embark on the journey of launching CaliConnected back in 2018. Flash forward to today, and CaliConnected has blown up into this awesome online headshop marketplace. We’ve got a wide range of products, from bongs, pipes, and dab rigs, all the way to vape pens and accessories – we’ve got it all covered. Our marketplace currently holds over $50,000,000.00 worth of inventory across over 50 vendors.

This year, we unveiled Smoke Source. Smoke Source is our B2B Channel, which gives e-commerce and brick-and-mortar retailers access to our marketplace through our technology that enables a white-labeled brand extension. For example in ecommerce, retailers can link to our inventory for dropshipping services through our Smoke Source app. For brick-and-mortar, we’ve launched state-of-the-art self-service kiosks. They’re kitted out with everything you need, including card payment setups and even a custom bong builder (yeah, we went there). Imagine “build-a-bear,” but swap the bears for bongs, and toss in around 7,000 other products! Dispensaries can set up these branded kiosks and let their customers explore our marketplace. Anything they want can be snagged and ready for pickup in just a few days. It’s a win-win, boosting revenue, foot traffic, and giving folks even more reasons to keep coming back. Plus, it takes away the risk and headache of managing heaps of extra inventory for the retailer or dispensary. There is nothing out there packaged together like this for Dispensaries or retailers, so we are really excited to see what the future holds as we tap into this market.

What else should we know about how you took your side hustle and scaled it up into what it is today?

CaliConnected was our inaugural venture into the business world. After winning a business case competition hosted by Target during my college days, I jumped straight into the retail world, taking a management role with the retail giant right after graduation. From there, I went on to oversee a retail territory for the largest plumbing company in the US. Even though I was pretty invested and enjoying the corporate world, my gut told me that it wasn’t the right fit for me in the long run. That’s when my college buddy – who’s now my business partner – and I decided to take a gamble. We registered an LLC. and set out on a quest to hit up real estate foreclosure auctions. The dream? Grab a steal and flip it for a tidy profit. We’d actually dreamed about this back in college, but back then, we were short on capital and got outbid every time. Unfortunately, that plan didn’t really pan out at this time, either.

So, we switched lanes and started exploring vending and e-commerce. We weren’t interested in the usual suspects – we wanted something that was new and not over-saturated with investors. Our big idea at the time was to give the sunscreen industry a facelift through vending machines. Think about it – why don’t we have sunscreen dispensers lining beaches? Especially public ones where cities could rake in extra cash and keep sun-worshippers protected. Plus, it could kickstart an eco-revolution, ditching plastic sunscreen bottles in favor of beachside dispensers.

Sounds cool, right? Well, it seemed like we were onto something until we dug deeper. We even met the holder of a utility patent that pretty much covered any kind of sunscreen dispenser. But guess what? Two companies were already fighting it out in the private space, neither of whom had a legitimate patent or licensing agreement. Long story short, it turned into a messy patent infringement saga story we didn’t want to get involved in, nor had the capital to get involved in.

Back to square one we went. This time, e-commerce was our bullseye. Our next winning concept? Launch the ultimate online headshop. Why dive into the ancillary cannabis space? Simple. While behemoths like Amazon own the online shopping game, there are niches they haven’t touched. Back then, most online shops for Bongs, Dab Rigs & Vapes felt sketchy and lacked customer support, making the experience less than stellar. The brick-and-mortar scene wasn’t riddled with these issues, but finding a one-stop marketplace for all things cannabis related was rare. Most head shops were mom-and-pop setups with limited stock and reach.

Cue Shopify Exchange – a platform where folks sell their starter stores. What do you know, we stumbled upon a tiny online headshop in the UK. They had a mere five products up for sale on a very simple Shopify store. We immediately saw the opportunity and knew the deal wasn’t about the inventory – it was about the name and URL. CaliConnected, we thought sounded like a brand that could fit in this market. We saw potential and took a shot at it, knowing that we could really improve the current branding and shopping experience. We did a full rebranding and incurred all the growing pains you could imagine, even pivoting our business model from a warehouse model to a full dropship marketplace model along the way in getting CaliConnected to the point that it is today after five years.

Have you ever had to pivot?

When CaliConnected kicked off, we were all about having our inventory stored in-house. For the first couple of years, things were buzzing along well. As we rolled into year three and the growth train kept chugging, a lightbulb moment hit us. If we wanted to truly take this venture to new heights, we had to get smart about our strategy. We were faced with a fork in the road: either haul in a massive pile of capital to supercharge our inventory and amp up our marketing game, or make a strategic pivot into the dropshipping space while supercharging our tech stack. A decision that would shape the course of CaliConnected. We did a deep dive into the competitive landscape to make an informed decision, looking closely at the top five online headshops, their moves, successes, missteps, and, mainly, their operations. After intensive research, we opted for the latter – a pivot to transform CaliConnected into a massive online marketplace.

This wasn’t a small task; it was a full-blown company-wide transformation. It meant saying goodbye to the old ways, even though they had served us well so far. We gradually scaled down our in-house facility, streamlining our staff and operations. Meanwhile, behind the scenes, we embarked on a massive undertaking – constructing our new marketplace’s intricate systems. From redefining our approach to inventory management to ramping up our technological abilities, the overhaul was a significant undertaking. This pivot wasn’t just about embracing a new model; it was a strategic shift that demanded reimagining every facet of our business. The transition wasn’t without its challenges, of course. We faced the intricacies of adapting our processes, retraining our team, and navigating the issues that naturally come with major change.

That decision, that pivotal moment, was our turning point though. It marked the juncture where we evolved from a traditional online retailer to a full-fledged, tech-driven marketplace. We optimized our resources, maximized our potential, and set the stage for the remarkable journey that followed through today. Without that decision, we would not be at the point we are at today with launching Smoke Source and monetizing our marketplace even further.

Contact Info:

• Website: Smokesource.co & CaliConnected.com
• Facebook: https://www.facebook.com/CaliConnectedUSA
• Linkedin: https://www.linkedin.com/in/nassir-silwany-a0589484/