The Cannabis Business Office's Social Equity Licensee Highlight series dives into the stories of social equity licensees currently operating in the cannabis space. By exploring the unique backgrounds, challenges, and opportunities of these owners, our case studies serve as unique window into the cannabis industry and a way for businesses to learn from one another.
IDY Distributors is an METRC/MED approved distribution company and one of Colorado's first licensed transport companies. They bring their logistical expertise to the cannabis industry to offer warehouse and distribution services, compliant sales solutions, and final mile logistics. Founder, Timothy Ruybal, shared the background of the business and his experience as a social equity licensee in the industry.
What sparked your interest in the cannabis industry?
I was first interested in the Colorado cannabis industry at a state level back in 2016. Most people in the industry told me I was “late to the dance” since I didn’t get started back in 2012. Being an entrepreneur, I instantly started to find areas in the cannabis industry that needed support and found a state-wide niche that wasn’t being tapped: distribution. At the time, each brand self-distributed their products by working with brokers or sales teams to get their products on the shelves. We immediately saw the value of our business and logistics knowledge.
How will your work impact the community?
We intend to use our relationships and industry insights to help other social equity business owners successfully participate. Rather than just talking about change, our model helps empower owners by opening the doors to other businesses that have knowledge and experience across industries that can bring value to Colorado’s cannabis industry.
Over the years, we have helped educate current businesses on the value of distribution and see the opportunity in utilizing social equity transporters as partners rather than competitors. There is plenty of opportunity to create revenue when it comes to logistics. Unfortunately, new home delivery services don’t offer sustainable income to keep businesses going. We are working directly with the state on creating an ecosystem of logistics contractors to get products to retailers, in turn creating relationships at the store level to eventually partner with home delivery services.
Is there anything interesting about your backstory that you’d like to share?
I personally have over 25 years experience in distribution and supply chain systems, and the team consists of 18 years experience in liquor and wine distribution. We have the background to handle operations in a highly regulated industry. We have seen success in working with state and local regulators on compliance, and understand some of the data they collect.
We have successfully delivered over 300k orders to Colorado since 2018, and we have stayed consistent in our reliability and trust we have built in the industry.
Please share something unique about your company.
We have helped over 9 different distribution companies set up operations in other states using our model and technology. We currently have a network of national cannabis distributors in Michigan, Chicago, Oklahoma, New York, Maine, New Mexico, Arizona, Washington and California. These relationships allow us to view other state’s product development, testing, and market share to help us understand consumers buying habits and market analysis. This information will be of use when inter-state commerce is legalized, and well established brands can move their product into the proper retail locations where it can succeed.
What challenges do you face as a small business and social equity licensee?
The main challenge we face as a small business is finding suitable and compliant real estate to operate in. When a new cannabis business is looking for space, most property owners and brokers add ridiculous charges to the lease and in some cases request a percentage of the company’s revenue. These predatory tactics impact some cannabis startups and really stunt the growth of the business.
From a social equity licensee perspective, the biggest challenge I see today is that many of the voices that “represent the minority community” in rule and law-making take a blanketed approach that doesn’t benefit the unique, individual business and owner. Also, most social equity business owners participate in workgroups that are not tied to the Colorado industry. Actions speak volumes. Workgroups can be great if there are relationships within the industry to make change happen. Many workgroups today act more as an idea incubator, rather than open doors for businesses.
What would you change about the Colorado cannabis industry if you could?
One of the first things I would change is eliminating the wholesale excise tax fee assessed on all wholesale purchases. With 280E in place, the industry is already operating at slim margins. Most people think that if you own a business in cannabis, you are making money hand over fist. In actuality, you're operating to essentially keep the lights on and keep your brand relevant in a highly competitive market.
Another issue I would address is working with the state on setting up a state-run distribution entity to help get products to retailers, establish a fair market evaluation on all products, and most importantly monitor the testing and manufacturing process for recall purposes. This is also a great model to set up as the nation is looking at federal interstate commerce in the near future. At the start of national commerce, most states will be required to monitor what products are coming in and going out of their regulated market. If the state of Colorado continues to be the regulatory pioneer in the industry, this model helps establish interstate communications on product manufacturing, testing, and labeling with other states.
We in Colorado need to take advantage of being the most mature cannabis market in the U.S and help other states coming online understand some of the complexities they’ll face as they mature.
Want your business to be featured in a monthly highlight? If you are an operational social equity licensed cannabis business, apply to be a part of our Social Equity Licensee Highlight series. To be considered for upcoming highlights, please complete our form. The next two questions are screening questions. Additional questions will appear if you are eligible.