Investors back Pacific Consolidated Holdings to merge leading LA-based liquor and weed delivery companies

There’s a new company that’s sitting on top of some of the fastest growing consumer-facing businesses in the world — liquor and marijuana delivery — and its name is Pacific Consolidated Holdings Group.

The investment firms and executive teams behind the Los Angeles-based delivery liquor delivery company, Saucey, along with Inception Companies, the backer of marijuana distribution company, Emjay, have formed Pacific Consolidated to merge their two companies and build what’s likely the largest “vice” company in the world.

(Although in a global pandemic and period of political tumult unseen since the 1960s, what even is vice anymore anyway?)

Financial terms of the transaction were not disclosed.

The merger is the first step of what’s a planned rollup strategy for PCH (also the nickname for the highway that runs along the California Coast), which aims to be the leading vertically integrated vice platform focusing on e-commerce, delivery logistics, and cross industry behavioral insights.

As the co-founder of Saucey and now chief executive of PCH, Chris Vaughn, said: “Everyone in the liquor industry is thinking about the marijuana business and everyone in marijuana is looking at liquor.”

Both Vaughn and his Saucey co-founder Daniel Leeb will take management positions at PCH, and Blumberg Capital and Bullpen will have a large equity stake in the newly formed holding company, Vaughn said.

“We’ve spent the past decade in bev-alc at the forefront of providing solutions to changing consumer shopping behaviors. What we’ve seen is a more exploratory customer than the industry recognizes, ready to try new form factors, products and categories. The one consistent theme is they want to be able to discover and shop these products conveniently, and to be able to trust their platform of choice,” said Vaughn in a statement. “The strength of PCH is that we’re able to provide unparalleled and personalized cross-industry shopping experiences to consumers, while also having the data to understand customer behaviors between cannabis, alcohol, tobacco and CPG. When you combine this with the diversified infrastructure of PCH and the incredible team we have working on these opportunities, it gives us the flexibility and the foundation for best serving the future of these industries.”

Saucey launched in 2014 and now operates across 22 markets including LA, San Francisco, San Diego, Sacramento, New York City, Chicago, Washington, Dallas, Orlando, Tampa and Miami.

Its sales growth has expanded 200% year-over-year even as the company maintains its profitability, according to a statement. The liquor side of the PCH business is indeed incredibly strong.

And of the 1 million users that the company surveyed (most in its largest market — California, which is perhaps one of the most mature consumer markets for cannabis consumption in the US) an overwhelming majority of 70% said they’d like to see integrated marijuana and liquor delivery services.

While Emjay was only formed a year ago, the company had built a groundwork of distribution, cultivation, and production licenses as it was getting off the ground. Formed by the Inception Companies, Emjay brought in Vaughn as an advisor to the company early on and as the company grew, so did the recognition among the investors and operators of the potential for a powerful merger, Vaughn said.

With Emjay, not only does PCH get a distribution company, but since it also acts a vertical operator the company can deliver marijuana products to consumers at a far lower cost than its competition.

Vaughn and Leeb have actually been operating the Emjay business since January and have grown the company’s revenues from less than $100,000 in transaction volume to the seven-figure sales that the company currently enjoys. And Emjay itself became a profitable business earlier this year, according to a statement. Now, the focus is on growing its footprint within Saucey’s massive California user base.

While there was a surge of interest and investment into the cannabis business in the industry’s early years following its legalization in certain states back in 2014, many of the market’s early leaders fell on hard times in 2019 as legal hurdles, grey market suppliers, a crisis in the vaping industry, and a lack of professionalization took their toll on the industry.

It’s a storm that Omar Mangalji, the former Goldman Sachs banker turned Los Angeles gadfly who co-founded the Inception Companies (and sometimes goes by the name Ronnie Bacardi).

“The broader cannabis market has largely struggled due to weak underlying fundamentals and poor management. But much like the dashed expectations that came with the rise and fall in the DotCom era, this industry is now evolving into Cannabis 2.0.”, Mangalji said in a statement.

With the merger of the two companies, Saucey users can create an Emjay account with their existing login and toggle between the two services simply by tapping on an icon.