MJBIZ - November/December - 47

5 Strategies for Success
By Omar Sacirbey
Jaunty-known as Naturae until
late September-entered New
York's recreational marijuana
market already in the red, and
getting out of that hole required
many strategies and decisions.
Here are a few more choices that
helped Jaunty get in the black:
1. LEAN LABOR
Jaunty was formed as Naturae,
a CBD product-manufacturing
company, in 2017 by CEO Nicolas
Guarino, Head of Agriculture Maxson Freeman and a
third partner who is no longer with the business.
packaging and struck a deal with
the manufacturer to finance
the remaining $100,000 at 10%
interest over 18 months.
Jaunty's facility in Hoosick Falls,
New York. Photo by DIane Chappell
" It's a combination of getting
financing from the suppliers,
timing on cash flow and having the
money be there, " Guarino said.
3. LOW MATERIALS COSTS
In terms of cost-cutting, " the
real trick " is reducing the cost of
materials, Guarino said.
Early in their experience with the recreational
marijuana market, the partners contributed as much
on the front lines as they did from the C-suite. Guarino
filled vape cartridges with Sales and Marketing
Director Christian Mollica, for example, delivered
orders, set up store displays, conducted budtender
trainings and more.
" We were super, super lean, " Guarino said, adding
that the team grew to 12 employees and generated
$700,000 in sales some months through a " relatively "
small number of stores. Jaunty kept its diligent dozen by
giving them a significant number of shares-anywhere
from 1% to 8% of the company. " I think that's what kept
them engaged, " Guarino said.
Today, Jaunty has more than 40 employees. Guarino
estimated the company pays its wage workers an
average of $24.50 per hour.
" The only way to do that is to keep the numbers
down, and you keep the numbers down by adding
automation, " Guarino said. In the near to medium term,
Guarino wants to have 50 employees and a revenue
target of $2 million per month.
2. AUTOMATION EQUIPMENT DECISIONS
Automation is an important part of Jaunty's costcutting
regimen and its growth as a company. Decisions
about buying equipment are driven by necessity and
return-on-investment calculation.
For example, Jaunty reached a point where it was
selling 3,000 units of 10-pack gummies per day, and
it was getting to be too much for the team of four
packagers. So, they bought a gummy-packaging
machine for $200,000.
" We were going to have to add an additional two
people at least, and then soon after that, another two, "
Guarino said. " Or we could buy a machine right now. "
Jaunty had about $100,000 to put toward the
" We do everything from scratch, if we can. We're always
going to avoid buying distillate at market prices, "
Guarino said, adding that a kilogram of distillate in New
York currently costs about $6,000 wholesale.
Instead, the company contracts biomass from nine
farmers and either extracts distillate itself or contracts
Lafayette, New York-based Beak and Skiff to do the
distillate production. This approach costs Jaunty
$4,000 per kilogram of distillate, or less, Guarino
estimated.
Guarino noted that by contracting distillate extraction,
the company frees up space for butane extraction,
which it recently introduced.
Jaunty also tries to reduce non-cannabis input costs,
such as vape cartridges. The company started with
eight or 10 vape suppliers but over time learned which
ones were best to work with and now buys from three
suppliers.
4. SETTING PRICES, MINDFUL OF MARGINS
Keeping the cost of goods down helps Jaunty target a
100% price markup on its products, allowing for a 50%
gross margin. Guarino said for higher-volume offerings,
such as distillate, Jaunty will settle for a margin of
around 40%. But with top-shelf offerings such as live
rosin, its margin is closer to 60%.
" That's how we set the price. We have to make that
margin because otherwise we're just not going to exist
as a company, " he said.
5. BETTER ACCOUNTING
After getting its first few shipments onto retail shelves
early this year, Jaunty executives decided they needed
a more thorough accounting system and developed
tighter processes for tracking profit and loss.
" It was one of the first and most important things that
we did ... and it was a big, long process to sit down with
accountants at the facility and tour them through every
single step, " Guarino said. " We need to make calculated
steps based on the financial statements. "
mjbizdaily.com | November-December 2024 47
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MJBIZ - November/December

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