Inside a nondescript Central Valley building, tucked between irrigation canals and orchards, sits what is probably the greatest collection of cannabis ever assembled. A constant buzz of activity hums inside as dozens of workers wearing reflective jackets unload semitrucks filled with cannabis and move carts of boxes back and forth across the warehouse floor. It\u2019s like someone took a Costco and swapped pallets of toilet paper for millions of joints, vapes and cannabis flower, all packaged and ready to be enjoyed.\u00a0<\/p>\n
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This is the storehouse for Nabis, California\u2019s largest distributor<\/a>, through which 30% of the legal market passes on its way from pot farms to retailers. You\u2019ve probably never heard of the company, but if you\u2019ve bought legal marijuana in California, there\u2019s a good chance Nabis touched it.\u00a0<\/p>\n While thousands of cannabis companies go under in California, including the spectacular collapse of the state\u2019s previous largest distributor<\/a>, Nabis has quietly grown into one of the biggest winners in the California cannabis market. The company is earning approximately $100 million a year in revenue and is profitable \u2014 a rare feat in the negative margins world of legal cannabis \u2014 and recently became the largest distributor in New York, according to CEO Vince Ning<\/a>.\u00a0<\/p>\n Article continues below this ad<\/p>\n Boxes of cannabis products at Nabis\u2019\u00a0distribution warehouse in San Francisco\u00a0as they wait to be shipped to retailers across the state. Nabis ships to nearly every cannabis store in California.<\/p>\n Lester Black\/SFGATE<\/p>\n The former software engineer founded the company in 2018 in a San Francisco apartment with his childhood friend Jun S. Lee. They started small at first \u2014 their original titles were co-CEO as well as delivery drivers 1 and 2 \u2014 and now they\u2019re processing $1 billion in cannabis a year. The growth has been surprising even to its founders.<\/p>\n \u201cEven a couple of years ago,\u201d Ning recently remembered, \u201cpeople were like, \u2018Who the hell is Nabis and why are we handing over all our stuff to them?\u2019\u201d<\/p>\n \u2018Very much like a marriage\u2019<\/p>\n By their mid-20s,\u00a0Ning and Lee had already established themselves in the tech industry. Ning worked at Microsoft and then, at 23 years old, sold a startup he co-founded to Amazon in 2017. Lee worked at Meta and by 24 was bootstrapping an artificial intelligence startup five years before the launch of ChatGPT made AI a household term.<\/p>\n Article continues below this ad<\/p>\n Make SFGATE a preferred source so your search results prioritize writing by actual people, not AI.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n The two childhood friends were well on their way to lucrative careers in tech, but they had always toyed with the idea of taking a risk working together on their own project. They were living together in San Francisco when, in 2016 and 2017, California was launching its legal cannabis market. The friends noticed a strange dynamic within the nascent industry: simply buying cannabis was a struggle.<\/p>\n \u201cWe just saw all these people wanted to buy weed, all these people wanted to sell weed, and it wasn\u2019t working,\u201d Lee said. \u201cNone of it worked.\u201d<\/p>\n A Nabis employee looks through a cold storage room at the company\u2019s Central Valley distribution facility.<\/p>\n Lester Black\/SFGATE<\/p>\n Ning and Lee decided to apply their problem-solving skills honed in the tech world to the cannabis marketplace, borrowing the last five letters of \u201ccannabis\u201d to launch their new distribution company in 2018. They signed a lease for a commercial space in Oakland and then started signing up cannabis brands, hand-delivering boxes of vapes and joints to retailers around the Bay Area.<\/p>\n Article continues below this ad<\/p>\n The combination of living and working together turned their relationship into something that looked \u201cvery much like a marriage,\u201d according to Lee.<\/p>\n \u201cIn the beginning, we were just in the trenches doing deliveries together, packing boxes together, assembling shelves or desks,\u201d Lee said. \u201cIt\u2019s a spouse in the truest sense of the word where like you wake up together, you work on everything together, and you go to bed thinking about the same thing.\u201d<\/p>\n Nabis had the benefit of venture capital funding from the start, going through the elite Y Combinator incubator and raising over $10 million in its first three years of business from investors including NFL Hall of Famer Joe Montana<\/a> and Stanley Tang, the co-founder of DoorDash, Ning said. But the founders didn\u2019t immediately drop that cash to buy the biggest space they could find. Instead, they expanded only as needed, as they ran out of space for products. First they launched inside a 500-square-foot Oakland space that Ning described as a \u201ccloset,\u201d then they grew into a 2,000-square-foot East Bay garage, followed by the 2021 opening of a 20,000-square-foot distribution facility in Southern California.\u00a0<\/p>\n This expansion came right as the California legal market went through its most turbulent years to date. Statewide sales were increasing as customers bought more cannabis during the COVID lockdowns; some California companies saw their valuations grow to billions. But nearly all cannabis businesses still struggled to turn a profit as their balance sheets were weighed down by costly regulations and taxes.\u00a0<\/p>\n Article continues below this ad<\/p>\n Employees move cannabis goods at the Nabis distribution facility in the Central Valley.<\/p>\n Lester Black\/SFGATE<\/p>\n Despite the cloudy outlook, Lee and Ning decided to place their biggest bet yet. In 2021, just a few months after opening their big Los Angeles facility, they raised $23 million to buy an 87,000-square-foot distribution facility in the southern Central Valley. According to Lee, they spent nearly all of their money on a warehouse that at the time, they could only fill 30% of. They weren\u2019t the largest distributor in California, but they believed they had room to grow.\u00a0<\/p>\n Nabis opened its new warehouse doors in 2023. Two months later, a rival\u2019s stunning collapse would give Ning and Lee the opportunity to fill all of those empty metal shelves.<\/p>\n Historic collapse<\/p>\n Just as\u00a0Nabis was getting ready to open its new warehouse, the biggest distributor in California at the time was in the midst of a crisis. Santa Barbara-based Herbl had quickly grown to be the state\u2019s largest distributor at the outset of the legal market, opening multiple distribution centers across California and capturing $700 million of the market annually.\u00a0<\/p>\n Article continues below this ad<\/p>\n<\/p>\n
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