MJBizMagazine July 2021 by MJBiz Daily

JULY 2021

MAG A Z IN E VOLUME 8 • ISSUE 6 $12.95

Patagonia Unites Players for U.S. Hemp Fiber Finding Directors for Your Board Strategies to Nail Retail Prices

SCALE How it Suits You

From securing licenses to M&A, cannabis companies looking to grow have more options than ever

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MJBizMagazine

July 2021 • Volume 8 • Issue 6

From the Editor

SCALE HOW IT SUITS YOU

From securing licenses to M&A, cannabis companies looking to grow have more options than ever.

Five Questions With Patagonia

Hemp Notebook

Trends & Hot Topics

Company News

BUILDING THE BOARD

Filling seats on your board of directors is getting easier as the industry expands.

Industry Developments

Best Practices in Retail

Industry Players JULY 2021

MAGAZINE VOLUME 8 • ISSUE 6 $12.95

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Patagonia Unites Players for U.S. Hemp Fiber Finding Directors for Your Board Nailing Retail Prices

SCALE How it Suits You

From securing licenses to M&A, cannabis companies looking to grow have more options than ever

On Our Cover Adam Berk, CEO of Driven by Stem, visits one of the company’s cultivation facilities in Oregon. Photo by Bob Williams Photography

Cannabis grows at one of Driven by Stemʼs cultivation sites. Photo by Bob Williams Photography

MJBizMagazine | July 2021

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ContactUs | Whoʼs Behind This Magazine? Magazine feedback We are here to help the multibillion-dollar cannabis industry prosper. Let us know how we can serve you. Email us at magazine@mjbizdaily.com with your thoughts, suggestions and any other feedback about the magazine and the stories we cover.

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FromtheEditor | Kate Lavin

A Good Problem to Have The marijuana industry has reached a point where even small businesses are expanding in regulated markets

hen the first U.S. cannabis dispensary opened in San Francisco in the 1990s, it’s unlikely the operators envisioned a day when publicly traded marijuana companies would own multimillion-dollar cultivation sites, manufacturing facilities and retail shops in dozens of states—all at the same time. The fact that a storefront was selling marijuana 30 years ago meant the business was subject to raids from all levels of law enforcement.

Not enough has changed at a national level since those days, but growth is happening every day in state and local markets.

How Do You Plan to Scale? Scaling might not be the right move for your business today, but it’s never too early to start thinking about the future. Whether your company operates in the ancillary space, cultivation, manufacturing, retail or another sector, it is easy to get bogged down making it through each day and forget to plan for months and years down the road. Set aside some time to learn from the cannabis executives in our cover package about how they used mergers and acquisitions, license applications and other strategies to grow their businesses to new heights.

Jumping on the Scale In this issue, the reporters of MJBizMagazine tackled the topic of scaling in the cannabis business. Whether a company has had a growth plan mapped out since the prelicensing stage or realized years later that consumers in other markets were clamoring for its products, one thing is certain: Needing to scale because demand outweighs supply is a good problem to have. And as owners and investors enter the marijuana industry from other sectors, they bring with them wide experience about how to scale a business wisely. Take Adam Berk, for example. The CEO of Driven by Stem, who appears on our cover this month, got his start in the food-delivery business. Berk founded Osmio, which you know today as Grubhub. As he explains, starting on page 42, once the model is established, expanding beyond the first market becomes simpler. “It’s the same model: same cars, same lockboxes, same hiring practices, same interview processes,” Berk said of Driven by Stem, the cannabis-delivery service he grew from California to Oregon and plans to expand to Michigan this fall. “It’s a rinse-and-repeat model. And that really makes the scaling a lot more cost effective.” Michael Dowdell, vice president of retail operations for Michigan-based Lume Cannabis, shared a similar sentiment, telling MJBizMagazine, “You don’t want to be doing a process five different ways at five different stores.” Dowdell should know: As director of retail operations for stereo company Bose Corp., he grew the number of retail properties 75% in 16 years and learned to create efficiencies by replicating processes in each store while making accommodations for variables such as layout.

MJBizMagazine | July 2021

Kate Lavin MJBizMagazine editor

FiveQuestions | with Patagonia

Material Witness

Alexandra La Pierre

Patagonia is actively working to bring the hemp fiber industry back to the United States By Laura Drotleff

iber is a hot topic among hemp producers looking for new markets—especially since prices have bottomed out for hemp flower and biomass.

But the lack of fiber buyers and the sector’s immature supply chain have industry observers warning that hemp growers who transition to fiber too soon might get ahead of themselves and end up with yet another glut. Californiabased outdoor-apparel company Patagonia and the state of Colorado are hoping to change that by bringing together farmers, machinery manufacturers, textile producers and hemp researchers. Patagonia has long used hemp in its Workwear products, sourcing it from China-based Hemp Fortex, which makes environmentally sustainable fibers. National legalization of hemp farming in late 2018 kicked off the company’s collaboration with the state of Colorado to help move the industrial-hemp supply chain forward through a project called Bring Hemp Home. A documentary about the project was released this past spring, following the project and detailing why reviving a domestic hemp-fiber economy is important to farmers, textile mills and the state. MJBizMagazine caught up with Patagonia Material Developer Alexandra La Pierre and Jason Gonzales, the head of marketing for Patagonia Workwear, to learn more about the collaboration.

How did Patagonia become involved in the Bring Hemp Home project? Jason Gonzales: The project began with Workwear as a category being created (at Patagonia) and the decision being made to use hemp in the majority of the styles. From there, the team had done a lot of visioning around how can we bring more hemp into the world from a planetary, mission-based standpoint. One of the places where it’s been outlawed for so long is the U.S., and of course with the passage of the 2018 Farm Bill, that changed. So that was almost what kicked off the project: How can we support and help establish a thriving U.S. industrial hemp industry?

10 MJBizMagazine | July 2021

This specific film and this specific project with the state of Colorado was the result of a lot of people communicating and saying, “OK, how can we bring all of these people who are a part of the whole process—not just the farming, not just the fiber, not just the yarn, not just the material, but everybody—to discuss how we can move it forward?” The government in Colorado, particularly the governor, has been very supportive. So, (in January 2020) it began in this conference room, where there was everybody from Patagonia folks to our Chinese supplier Hemp Fortex, to hemp (businesses) to our yarn spinners, to material suppliers to people from the U.K. All of these folks were interested in a part of this whole thing. That was the moment where it started, where we said, “OK, how can we work together to actually make this happen?” Gov. Jared Polis actually did come and speak and showed his support, and that’s what kicked it all off. From there, it became email chains moving it forward, but that was the beginning of it.

What inspired the team at Patagonia to bring everyone together? Alexandra La Pierre: The whole purpose was a vision that came from our business unit director and some work the company had been doing. We were getting these calls every day from farmers who are so passionate about hemp (saying), “Please, what do I do with this hemp fiber? Can Patagonia buy my hemp fiber and put it in their clothes?” And, of course, every time a farmer calls, I want to tell them I can buy their fiber. But there are so few resources out there right now to help direct them into: What is the

Jason Gonzales

businesses starting to support it—which, then again, starts to support the farmers and the processors. So, really, (the goal is) just an expansion and an establishment of the U.S. hemp industry. La Pierre: We’ve worked with Hemp Fortex for the past 25 years or more as a company. They are our primary supplier for textiles, and they do beautiful things. I’ve been to those manufacturing facilities in China and seen some of the hemp fields. This gave us a unique opportunity to bring that legacy and the knowledge that they have—and the textiles they’ve been making for hundreds of years—and bring some of that back here and see that knowledge get passed on and help jump-start an industry that needed that leadership and mentorship.

How will this project help Patagonia source hemp that is grown domestically?

correct way to grow? How should they plant? What type of seed should they use? And then, on the other side, I was getting all of these calls from manufacturers, processors, textile people, spinners, who were saying, “All we’re hearing is about this hip, cool new thing called hemp. What is Patagonia using? How much hemp does Patagonia use?” So, the more calls that we got as a company, we started to say: All right, we need to connect these pieces. And we need to have everyone sit down in a room together and talk to each other, not just through Patagonia. That’s essentially why we ended up having this conversation in Colorado in the first place. And it was like a collaborative melding of the minds, so to speak, for the hemp industry, bringing each piece of the processing in there.

What is the goal of the Bring Hemp Home project? Gonzales: One goal is to elevate and raise awareness around industrial hemp. I think just a center of gravity around hemp for fiber is something that would be a really great outcome. The second thing, in terms of our goals, would be to increase the amount of hemp being grown in the U.S. and also the supporting infrastructure that has to go right along with it to process it. Establishing that supply chain that’s needed—not just from growing it and not just processing bulk. We don’t want farmers and processors to go and spend a ton of money until we really continue to get some additional support from the broader industry … and not just apparel brands. Hemp fiber and hurd is used for so many things. If people are aware of what hemp can do, then I think you’ll see more

Gonzales: Patagonia doesn’t traditionally go in and buy retted hemp from farmers or even decorticate hemp from processors. But the purchase of the finished material on the end of it needs to happen, and that’s certainly where Patagonia is a contributor to these projects. We are planning to use U.S.-grown industrial hemp in our Patagonia Workwear. And we don’t necessarily have a target date specified for that, but it’s definitely less than five years away.

Are other clothing manufacturers involved in the project? La Pierre: It’s a lot of this chicken-or-egg situation with other brands. They really are looking for that proof of concept. It’s such early days, but to us, that’s OK. You have to just take those first steps and then just continue to evolve and get better. But our hope is that we do include other brands. We aren’t just cultivating a U.S. hemp industry to only have Patagonia make hemp Workwear or hemp apparel. We want all the big brands to look at hemp, for two main reasons: • It will help support farmers and keep them on their lands. • What (hemp) does for the soil and carbon capture for fighting climate change. So, the more folks that can actually support hemp as a fiber, the better. And (we) want to help other brands get access to it if they want our help.

Laura Drotleff writes about hemp and CBD for Hemp Industry Daily and MJBizMagazine. She can be reached at laura.drotleff@ hempindustrydaily.com.

July 2021 | mjbizdaily.com

HempNotebook | Kristen Nichols

Athletes on the Outside Hemp operators should use their influence for change in college athletics

ports and corporate sponsorships go together like baseball and a glove.

Race cars just don’t look right unless they’re plastered with ads, and you can’t imagine an athlete such as Tiger Woods without a Nike swoosh somewhere on his shirt or cap. But a recent athletic sponsorship made me do a double take. Colorado CBD maker Synchronicity signed a multiyear agreement to sponsor University of Colorado Athletics—likely making it the first cannabis sponsorship in a Power Five conference, if not an NCAA first. Here’s why it’s weird: College athletes aren’t allowed to use CBD or any other cannabinoids. So it was absolutely bizarre when University of Colorado Athletic Director Rick George announced in a statement that Synchronicity’s “commitment to health and wellness (were) very much aligned with our athletic department.” The news release also bragged that the sponsorship deal would include in-game promotions in the university’s football stadium and basketball arena and would “help ensure CU Athletics can continue to provide a holistic, world-class experience for studentathletes in all sports.” Say what?

Unlevel Playing Field I asked the school and Synchronicity if the student-athletes would be

allowed to take CBD, a nonintoxicating cannabinoid now cleared for use by Olympic athletes and other international competitors. Nope. All cannabinoids are a banned substance under NCAA policy. Neither the school nor the manufacturer would answer questions on the record about the size of the sponsorship or why the school’s athletics department would want to promote a product that young athletes on the field are not allowed to use. The NCAA certainly isn’t the first sports regulatory body to have a conflicted relationship with cannabis—be it low-THC hemp or high-THC marijuana. All four major professional sports leagues in the United States—National Football League, National Basketball Association, Major League Baseball and National Hockey League—have been slow to acknowledge that their athletes commonly use cannabis to recover and relax. But the pro leagues at least have reduced penalties for cannabis or removed it entirely from their lists of banned substances. The NFL even convened a meeting this year with the NFL Players Association to learn more about the science of CBD use for pain relief. That makes the NCAA’s position on cannabinoids even more confounding. For an institution that is routinely under fire for running an exploitative and broken system that has made billions off the uncompensated sweat of

The NCAA certainly isn’t the first sports regulatory body to have a conflicted relationship with cannabis.”

12 MJBizMagazine | July 2021

young people—and, disproportionately, Black athletes, at that—maintaining a prohibition on cannabis use seems like an unforced error.

Power for Good I’d love to see Synchronicity use its sponsorship and the ads it paid for to highlight the NCAA’s nonsensical ban on cannabinoid use and push for change. At the very least, I hope other CBD manufacturers don’t use their profits to support institutions that perpetuate inequity. Cannabis has been snubbed for decades by corporate sports. It’s time the cannabis industry uses its newfound wealth to advocate for change instead of simply being flattered it was invited to the party. Kristen Nichols is the editor of Hemp Industry Daily. You can reach her at kristen.nichols@hempindustrydaily.com.

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Trends & HotTopics | Stacie Nyborg and Airina Rodrigues

Legal Considerations for Scaling in the Cannabis Business

his year’s cannabis capital market activity already has exceeded that of 2020 as more institutional investors and lenders are making moves into the sector. This influx of capital provides more opportunities for cannabis companies to scale for continued growth—especially as more states approve adult-use legalization. During this time of growth, however, cannabis companies should continue to keep in mind the unique challenges facing their industry as it continues to mature and develop.

Corporate Governance and Control While bringing on additional investors is often necessary to grow, cannabis companies should think carefully about how the new investor will impact the management and control of the company. Most major investors will require a seat on the company’s board of directors or some kind of board observer rights, which brings more scrutiny of the corporation’s governance and management. Founders might be in for a surprise when the investor that initially seemed agreeable starts questioning the company’s management policies after the deal closes. To avoid this, the company should consider establishing best practices for issues such as hiring and compensating personnel or making capital expenditures. Putting these measures in place

early helps to avoid objections by new board members or observers and also provides existing management with a foundation to make informed business decisions and demonstrate they are acting in good faith. Getting ahead of corporate governance issues and hiring qualified professionals to lay the groundwork for the company’s management and strategic vision also will help attract funding. Before committing to invest, institutional investors will want to see that the company has a sophisticated, scalable operation, which includes having solid financials, good relationships among the current owners and investors and a wellrespected reputation in the industry.

Managing Reporting Requirements Cannabis companies should also be aware of state and local reporting requirements whenever a new owner is added. In California, for example, all owners or financial-interest holders— including individuals and business entities—need to be reported to the state’s Bureau of Cannabis Control. For business entities, this might include disclosing each of the individual owners and entities in a multilayer business structure as well as those that have control of the entity. Failure to comply with these requirements could result in license and operating suspensions and an administrative headache for the company.

Real Estate and Landlord Issues Expansion of a company’s operations often means growing into new real estate as well. Although cannabis might be legal in a given state, local cities and counties often have their own operating restrictions. This is especially true in Massachusetts and California, where many local jurisdictions have put bans on cannabis businesses. Cannabis companies should be sure to familiarize themselves with the local requirements before entering into any real estate transactions. Even if operating a cannabis business is legal on the state and local levels, landlords might still be unwilling to lease to a cannabis company—especially a plant-touching business. Landlords that do rent to cannabis companies often charge above-market rates and have additional terms and conditions designed to protect the landlord. The cannabis company will want to review leases for early termination clauses, penalties and specific payment requirements that could allow the landlord to terminate the lease. The company should also keep in mind that if a landlord receives a share of the company’s profit as part of the rent, the landlord may also be subject to reporting and disclosure requirements.

Brands and Intellectual Property One way to scale a cannabis business is to enter interstate trademark

If a landlord receives a share of the company’s profit as part of the rent, the landlord might also be subject to reporting and disclosure requirements.”

14 MJBizMagazine | July 2021

licensing deals. In exchange for payment (typically a royalty), the licensor permits an out-of-state licensed operator to produce and sell cannabis products under the original business’ brand name. Cannabis companies considering such licensing arrangements should consider several issues. First, obtaining federal registration of trademarks covering cannabis products is presently impossible, since the U.S. Patent and Trademark Office routinely rejects such applications as unlawful under the Controlled Substances Act. State trademark registrations are typically not granted until the brand owner has used the mark “in commerce”—that is, to conduct business—in that state. Therefore, in cannabis licensing deals, parties should be mindful of the precise scope of rights that

are being licensed. Brand owners should be wary of providing robust representations and warranties regarding their trademarks since they will not have federal registrations covering cannabis products and typically will not be able to obtain a state registration in the market of interest until the deal has closed and after product launch. Second, all trademark licenses require that the brand owner exercise quality control over the licensed products for the license agreement to be held valid and avoid abandonment of trademarks through so-called “naked” licensing. Obviously, shipping across state lines is not possible. The parties must think creatively about how to conduct inspections in compliance with applicable law. Finally, the parties must consider how to structure payments, including

whether sales royalties payable in exchange for the trademark license might trigger disclosure requirements under state law. For example, royalties based on sales revenues might result in a brand owner becoming a financial interest holder in its licensee, triggering disclosure obligations. Because state rules vary, appropriate diligence needs to be conducted in every state in which a brand owner licenses its trademarks. Stacie Nyborg counsels corporate and individual clients, analyzing risks and achieving their goals for the office of Brownstein Hyatt Farber Schreck in Santa Barbara, California. Airina Rodrigues is a shareholder in the law firm’s Denver office, advising clients on the development, protection and commercialization of intellectualproperty assets

July 2021 | mjbizdaily.com 15

CompanyNews | U.S., Canada & International

U . S . D E V E LO PM E N T S

By MJBizDaily and Hemp Industry Daily staff

Recent deals, acquisitions and other announcements from cannabis companies

Verano Nets $100 Million to Support Cannabis Moves

Cannabis REIT Upsizes Senior Note to Raise $300M Cannabis industry real estate investment trust Innovative Industrial Properties (IIP) of San Diego said it upsized a previously announced private debt offering to raise $300 million. The senior notes from IIP’s operating partnership carry an interest rate of 5.5% and mature in 2026. The new debt ranks equally with other debt held by IIP’s operating partnership, including 3.75% exchangeable senior notes due in 2024, according to the company. IIP undertakes real estate sale-leaseback deals with major U.S. cannabis companies and trades on the New York Stock Exchange.

Marijuana Hydroponics Firm To Buy Nutrient Business Hydroponics equipment and supplies company Hydrofarm Holdings Group struck a deal to acquire nutrient producer House & Garden for roughly $125 million. It’s Hydrofarm’s second acquisition this year. The Fairless, Pennsylvania-based ancillary cannabis company entered a cash deal for Humboldt County, California-based House & Garden and several related businesses that manufacture nutrients under the House & Garden and Mad Farmer brands. The company recently acquired another Californiabased plant nutrient manufacturer and distributor, Field 16, for $78.1 million.

REIT Strikes Deal for Michigan Greenhouse Power REIT announced an $18.5 million purchase agreement to acquire a Michigan property that the real estate investment trust describes as the state’s “largest greenhouse cannabis cultivation and processing facility.” The unidentified property is approximately 66 acres in size, with a 522,530-square-foot “high-tech greenhouse and processing space.” Plans are in place to add 330,236 square feet, according to a news release. The company did not specify where the property is located in Michigan but said its location “offers the potential for unlimited cannabis cultivation licenses.” Power REIT invests in greenhouse properties and other types of real estate.

18 MJBiz Magazine | July 2021

Illinois-based Verano Holdings entered into an amended $130 million loan agreement that provides the multistate cannabis operator an additional $100 million of funding at an annual interest rate of 9.75%. Verano said the upsized loan will improve the company’s liquidity and flexibility and support its strategic growth. The credit agreement has a maturity date of May 30, 2023. Verano recently announced two transactions totaling $175.5 million in cash and stock to add cultivation and retail capacity in Pennsylvania.

GenCanna Sues Over Drying Dispute Hemp and CBD company GenCanna filed a lawsuit in a Kentucky federal court alleging that hemp processor Vertical Wellness reneged on an agreement to provide drying services for 12 million pounds of hemp. According to the suit, Winchester, Kentucky-based GenCanna said it had asked Cadiz, Kentucky-headquartered Vertical Wellness to pause its drying services in November, but Vertical Wellness restarted in December without GenCanna’s permission. According to correspondence cited in the lawsuit. Vertical Wellness said it resumed the operations based on the agreement that GenCanna’s hemp would be processed before the end of 2020. The lawsuit claims breach of contract and seeks unspecified damages and costs.

The Parent Co. Spends $67M on Supplies, Retail The Parent Co. (TCPO Holding Corp.) said it is spending $67 million to bolster its supply of California-grown cannabis and get access for its products on retail shelves. The Parent Co. announced a $50 million cash investment in exchange for a 6.2% stake in Glass House Group as well as the acquisition of 4 acres of outdoor cannabis farms in Sonoma County. Glass House will carry The Parent Co.’s 17 brands in all its stores. The Parent Co. also said it has acquired four Sonoma County marijuana farms run by Mosaic.Ag for $17 million in cash and stock.

Curaleaf Acquires Los Sueños Massachusetts-based multistate marijuana operator Curaleaf Holdings plans to grow its footprint in the Colorado marijuana market by acquiring the cultivation and retail assets of Pueblo, Colorado-based Los Sueños Farms.

CompanyNews | U.S., Canada & International The proposed acquisition is worth $67 million, 61% of which will be paid in Curaleaf subordinate voting shares, 29% in cash at closing and 10% in assumed debt. A contingent payment worth another $8 million “will be paid based upon operating cash flow-based targets for 2022,” Curaleaf said in a news release announcing the deal. The Los Sueños acquisition includes three outdoor cannabis cultivation sites in Pueblo totaling 66 acres, an indoor cultivation facility and two adult-use retail stores. The new production capacity will “fuel the further deployment” of Curaleaf’s Select brand of marijuana products in Colorado. Curaleaf trades on the Canadian Securities Exchange and on the U.S. over-the-counter markets.

Holistic Industries Raises $55 Million for Expansion Holistic Industries, a vertically integrated multistate marijuana company operating in six U.S. markets, secured a $55 million convertible note, nearly doubling a

$30 million fundraising goal the company set in March. The oversubscribed offering was led by the Stoneview fund of Harbert Management Corp., an investment group with offices in New York and Birmingham, Alabama. Washington DC-based Holistic will reportedly use the money to commence operations in Missouri and West Virginia, where the company has secured licenses, and enter new markets.

Oklahoma Marijuana Firm Closes $44M Funding Oklahoma-based Stability Cannabis completed a $44 million Series A funding round and acquired a minority ownership stake in a vertically integrated Missouri medical marijuana business. Stability Cannabis said that its production capacity now includes 60 acres of greenhouse and outdoor cultivation canopy as well as 95,000 square feet of indoor growing space. The company also has a commercial kitchen and a processing lab and runs a 24-hour medical marijuana dispensary in Oklahoma City.

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Stability Cannabis didn’t disclose its plans for the $44 million, nor did it identify the Missouri MMJ company in which it acquired a stake.

Harborside Acquires Sublime for $43.8 Million Oakland, California-based Harborside agreed to acquire the manufacturer and pre-roll brand Sublime for $43.8 million in cash and stock. Harborside agreed to pay $5.4 million in cash for California-based Sublime, and the other $38.4 million will be in shares of Harborside, which trades on the Canadian Securities Exchange and on over-the-counter markets. The purchase price was based in part on the projected 2021 revenues of Sublime, which is expecting $24.6 million in revenues for the current year. The company announced plans to begin selling Sublime-licensed products in states beyond California with legal recreational cannabis markets.

Chicago MJ Store Workers Vote to Join Teamsters Budtenders at Modern Cannabis in the River North neighborhood of Chicago voted “overwhelmingly” to join

Teamsters Local 777, according to the union. The Teamsters are likely still behind the United Food and Commercial Workers (UFCW) union in organizing cannabis industry workers. The UFCW has held elections at multiple marijuana businesses in California, Illinois, Massachusetts, New Jersey, Pennsylvania, Rhode Island and in other states.

HempFusion Announces Acquisition Agreements Probiotic and CBD manufacturer HempFusion Wellness entered two $25 million deals. The Denver-based company announced: • A $25 million agreement to purchase Santa Monica, California-based Sagely Naturals, which creates products sold by retailers such as CVS, Rite Aid, Albertsons, Sprouts and Nordstrom. • An agreement to buy the holdings company that owns the Apothecanna CBD line for up to $25 million in a stock-and-cash deal. The deal with Denver-based APCNA Holdings gives HempFusion a CBD brand sold in 1,800 CVS Pharmacies locations.

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CompanyNews | U.S., Canada & International

Hexo Announces Multiple Acquisitions Hexo Corp. of Ottawa, Ontario, struck a definitive deal to buy Redecan, one of the leading adult-use producers in the country by market share, in a cash-and-stock deal worth $766.4 million (CA$925 million). The deal would vault Hexo into the No. 1 position in Canada’s recreational cannabis market, surpassing rival producers Canopy Growth and Tilray. Hexo has been on an M&A tear this year, spending $1 billion (CA$1.2 billion) buying competing licensed producers. The company is buying competitor 48North Cannabis Corp. of Ontario in an all-stock deal worth approximately $41 million. Hexo also agreed to buy a 50,000-square-foot cannabis production facility in northern Colorado, marking a step forward for the Canadian producer’s U.S. ambitions. Terms of the deal weren’t disclosed.

Tilray and Aphria Complete Merger

I N T E R N AT I O N A L DE V ELO PMEN T S

Once-rival cannabis producers Tilray of British Columbia and Aphria of Ontario completed a megamerger, forming one of the biggest diversified marijuana, hemp and beer companies in the world. The new company will operate under the Tilray corporate name, with shares trading on the Nasdaq.

The combined company has a market cap of approximately $8.2 billion, according to a May 3 news release announcing the merger. The new Tilray will be led by Aphria CEO Irwin Simon, with former Tilray CEO Brendan Kennedy taking a seat on the new company’s board. The company will control about 19% of Canada’s recreational cannabis market, estimates ATB Capital Markets, an investment banking and financial services firm in Toronto.

Canadian Manufacturer Buys Green Roads CBD The Valens Co., a Canadian marijuana product manufacturer, announced that it will acquire Florida hemp-CBD manufacturer Green Roads CBD. The deal includes $40 million up front, including $25.4 million in Valens common shares and up to $14.6 million in cash, plus up to an additional $20 million in earnout payments if earnings goals are met after the transaction. A privately owned, hemp-derived CBD company, Green Roads makes consumer products that are sold online and in more than 7,000 retail stores. Additionally, Green Roads provides B2B manufacturing services for several of its partners.

High Tide Gets OK for Nasdaq Listing High Tide, a major Canadian retail marijuana chain, received approval to list its shares on the Nasdaq Capital Market. Shares of the Calgary, Alberta-based company began trading June 2. The company will retain its Canadian stock exchange listing on the TSX Venture Exchange. High Tide consolidated its shares in May to meet the Nasdaq’s listing requirements.

Canapar sources biomass from farmers under its subsidiary, Canapar Farming in Italy, then manufactures and processes CBD oil and isolates. Ramm is active in CBD pharmaceuticals in South America, producing the drug Epifractan in Uruguay for the local medical market and the wider regional market.

Ramm Pharma Acquires Italian Processor Ramm Pharma, a cannabis-based pharmaceuticals company with products in several Latin American countries, bought Sicilian CBD processing firm Canapar in an all-stock transaction worth about $22 million. Toronto-based Ramm purchased 49% of Canapar stock earlier this year.

22 MJBiz Magazine | July 2021

Have a company announcement you want us to consider? Send a news release or general information to omar.sacirbey@mjbizdaily.com. (Note: We’re looking for news about expansions, financing, mergers and acquisitions, partnerships and similar developments, not product-related announcements.)

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IndustryDevelopments | International & State MAP LEGEND High level of medical development/implementation Medium level of medical development/implementation Low level of medical development/implementation Other - federally illegal but unique circumstances Recreational

Countries included have passed legislation at the federal level and must fulfill at least one of the following criteria: • Cultivation, manufacture or sale of medical and/or recreational cannabis allowed. • Doctors can prescribe medical cannabis. • Import and/or export of medical cannabis allowed. High: Countries at the forefront of the global industry. Frameworks are established, and adoption is well underway. Medium: Implementation has begun but is still limited or restricted; lots of room for the market to develop. Low: Legislation has been passed, but implementation is very limited or nonexistent. Decriminalization is not included.

National & International News Lawmaker Reintroduces MORE Act U.S. House Judiciary Chair Jerry Nadler reintroduced a social justice-focused marijuana legalization bill known as the MORE Act on May 28 amid hopes that a newly elected president and Congress would result in the legislation’s passage. The MORE Act—formally known as the Marijuana Opportunity Reinvestment & Expungement Act—would legalize MJ federally by removing the plant from the federal Controlled Substances Act. During the previous Congress, the House passed a similar version of the bill, but the measure stalled in the

26 MJBizMagazine | July 2021

Senate. While House passage of the MORE Act is likely again, the Senate remains a higher hurdle. Most bills in the Senate require 60 of 100 votes to pass, and the Senate has a more conservative stance toward marijuana.

Retail Shakeout Expected as Ontario Heads Toward 1,000 Cannabis Stores Ontario is projected to reach 1,000 licensed marijuana retailers by the end of this summer, marking a key growth milestone in Canada’s largest provincial cannabis market. That rapid market expansion, however, could lead to a thinning of the herd, with a number of Ontario store

operators telling MJBizDaily that they expect a significant shakeout among retailers. The Alcohol and Gaming Commission of Ontario, which licenses cannabis stores, confirmed that it “anticipates that 1,000 (retail store authorizations) will be issued by Sept. 1.” “I would say by the end of summer, you’re going to see shops in very saturated environments close down rapidly,” said Katy Perry, founder and CEO of Ontario retailer Toke Cannabis. “The market’s just not big enough to support them all.” Ontario initially lagged in cannabis store rollouts but recently overtook Alberta to become home to the most marijuana retailers of any Canadian jurisdiction.

Denmark to Make Cannabis Cultivation Law Permanent Denmark’s trial scheme for medical cannabis will be extended beyond the end of 2021, when the temporary program had been set to expire, the country’s Ministry of Health announced. The trial gives doctors the ability to prescribe cannabis to patients and appropriately licensed businesses the ability to grow and ship medical marijuana. A majority of parliamentary parties agreed to make permanent the ability for businesses to grow cannabis for medical use—a welcome move for some Canadian companies that operate production subsidiaries in Denmark.

July 2021 | mjbizdaily.com 27

IndustryDevelopments | International & State WA MT

MN ID

TN AR

SC MS

DE MD

RI PA

LA FL

■ Medical ■ Recreational HI

Note: This map does not include states that have legalized only CBD-based oils.

State News

Alabama Gov. Kay Ivey signed a bill May 17 to legalize a medical cannabis market in Alabama. Under the law, rules will be adopted in time to allow business license applications to start by Sept. 1, 2022. The Alabama Compassionate Act bans smokable flower, vaping products, candies and baked goods. It also has low dosage limits. But the measure does offer a number of licensing opportunities: • Up to five vertically integrated licenses. • Up to four dispensary licenses. • Up to four processing licenses. • At least four cultivation licenses.

Arizona State legislators rejected a bill that would have banned marijuana companies from placing billboard ads within 1,000 feet of any school, child-care center, church or public park. The measure was intended to keep children from being exposed to marijuana advertising. Only 18 of 30 senators wound up backing the bill, and 23 were required to pass. Opponents of the move said they were concerned they were being put in a position to give the alcohol industry an arbitrary leg up over their cannabis counterparts. Neighboring California, by contrast, has been busily enforcing a ban on marijuana billboard ads next to highways that cross state lines.

28 MJBizMagazine | July 2021

California Two bills in the state Legislature that would establish a new regulatory framework for hemp-infused goods—including foods and drinks containing CBD—are poised to become law this year, which could jump-start the state’s nascent hemp industry and potentially give marijuana businesses an opportunity to expand into a federally legal crop. Assembly Bill 45 and Senate Bill 235 are identical and have the support of Gov. Gavin Newsom and many legislators, sources told MJBizDaily. But few in the hemp and marijuana industries are happy with the legislation, and the bills are likely to be amended. If either bill passes, the state’s hemp market could grow significantly, and if they’re amended, licensed marijuana businesses could have more opportunity to capitalize on hemp and CBD products.

Colorado The first state to launch adult-use marijuana sales banned delta-8 THC from hemp extracts. The Colorado health department said that “chemically modifying or converting any naturally occurring cannabinoids from industrial hemp is noncompliant with the statutory definition of ‘industrial hemp product.’” The move comes as THC isomers derived from hemp extracts such as CBD have shaken up the cannabis market. Proponents of products such as delta-8 and delta-10 THC argue that because the 2018 Farm Bill legalized hemp extracts, the products are legal. But the U.S. Drug Enforcement Administration disagrees, because delta-8 THC is manufactured from hemp-derived CBD, not extracted directly from the plant.

July 2021 | mjbizdaily.com 29

IndustryDevelopments | International & State Florida The state Supreme Court on May 27 left Florida’s medical marijuana licensing system intact, deciding that a constitutional challenge to vertical integration and license caps isn’t likely to succeed on its merits and handing a defeat to small businesses hoping to break into the market. The 6-1 decision means that state regulators of Florida’s $1 billion medical marijuana industry won’t be required to develop a new licensing structure that includes stand-alone licenses and opportunities for smaller companies and entrepreneurs. The current industry is dominated by a small group of vertically integrated multistate operators.

Idaho Only days after the Idaho Legislature shot down an anti-marijuana legalization measure, Gov. Brad Little signed a measure that foes say will make it extremely difficult to get initiatives and referendums to voters via the ballot. The governor told legislators he sided with people in the state who believe urban voters have too much say in the initiative process. It is unclear how the law will impact a medical marijuana initiative that backers are trying to get on the Idaho ballot in November 2022. The new law is expected to be challenged in state and federal courts.

Illinois The Illinois House of Representatives passed a measure that would regulate delta-8 THC and other products. The bill’s sponsor, state Rep. Bob Morgan, said the products represent a “public health crisis.” Illinois legalized recreational marijuana in 2019.

Kansas Legislation to legalize medical marijuana fell short in Kansas as lawmakers wrapped up their work on such bills without the Senate taking action. The Kansas House of Representatives had approved a House substitute of Senate Bill 158 in early May by a 79-42 vote. The measure will pick up where it left off when the Legislature reconvenes in early 2022, according to the Marijuana Policy Project. Gov. Laura Kelly supports the legalization of medical cannabis. The state Senate remains an obstacle.

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IndustryDevelopments | International & State Kentucky In a letter to Kentucky hemp-license holders, Agriculture Commissioner Ryan Quarles clarified that delta-8 THC is a controlled substance. “Distributing products containing (delta-8) is illegal and distributing such products could lead to your expulsion from the Hemp Licensing Program as well as potential exposure to criminal prosecution,” he said.

Louisiana An attempt to legalize adult-use marijuana died in the Louisiana House of Representatives, but not before signs emerged that such an effort might eventually find success. House Bill 699 lost by a vote of 48-47; the measure needed 70 votes to pass. Separately, state lawmakers passed a bill that will allow smokable flower sales beginning Jan. 1, 2022. Patients will be allowed to purchase up to 2½ ounces of smokable marijuana every 14 days, according to the measure.

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Massachusetts The state’s Cannabis Control Commission announced that eligible applicants for delivery permits can now seek precertification and licenses, which are earmarked for social equity participants and economic-empowerment applicants for the first three years of the program. The new licenses allow companies to purchase products wholesale from cultivators and manufacturers and deliver them directly to customers. In other news, Massachusetts cannabis companies paid at least $2.46 million in fees more than lawfully allowed under “host community agreements,” according to a new study paid for by the Massachusetts Cannabis Business Association and conducted by the University of Massachusetts in Boston.

Minnesota The state Legislature approved smokable flower for medical cannabis patients, which could significantly boost sales in what has been a heavily regulated MMJ market that has only two operators. The change, effective no later than March 2022, will provide a more affordable option to customers and might financially strengthen the state’s MMJ program overall. Minnesota House lawmakers also passed adult-use marijuana during the legislative session, but that bill died in the state Senate.

July 2021 | mjbizdaily.com 33

IndustryDevelopments | International & State Mississippi The state Supreme Court struck down a medical marijuana legalization initiative that voters overwhelmingly approved last November, shattering a market that was potentially worth more than $250 million in its first year of operation. The loss is believed to mark the first time an MMJ initiative has been overturned after residents approved it at the ballot box. Mississippians passed the initiative at the polls in November by a nearly 3-to-1 margin. The court ruled that the MMJ initiative didn’t meet the state’s process for collecting signatures because of a change in congressional districts. Mississippi’s secretary of state said he won’t contest the decision.

Montana Gov. Greg Gianforte signed a watered-down bill to implement a recreational marijuana market after months of lawmaker infighting over whether a voterapproved ballot measure should proceed. Some of the biggest changes include a three-month delay in the start of recreational marijuana sales, a new 35% THC potency cap for adult-use flower and an 18-month head start for existing medical marijuana companies over market newcomers. “I would use the word ‘workable,’” said Misty Carey, a longtime Bozeman medical marijuana businesswoman. “It’s not sexy, it’s not easy, but it’s workable.”

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Nebraska A restrictive medical cannabis bill met its demise in the Nebraska Legislature after state lawmakers failed to overcome a filibuster. The bill, sponsored by Nebraska Sen. Anna Wishart, would have legalized MMJ only for patients with 17 medical conditions and would have prevented home cannabis cultivation by patients. Wishart framed the bill as a “last chance” for state legislators to approve regulation of medical marijuana before the issue returns to voters in a ballot measure expected next year. Nebraska remains one of only a few U.S. jurisdictions where cannabis is still completely illegal for any purpose. A 2020 ballot measure to legalize medical marijuana in Nebraska failed last September after the state Supreme Court ruled the bill was unconstitutional.

Nevada A bill allowing marijuana consumption lounges was among a flurry of last-minute measures approved by Nevada lawmakers before they adjourned for the year. The bill will allow Nevada regulators to offer two new types of marijuana business licenses related to consumption lounges: • One for retailers that want to open consumption lounges on the same property as their retail shops. • One for stand-alone lounges that will be limited to single-use products, in the same manner as bars that sell alcohol.

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IndustryDevelopments | International & State New Mexico State regulators released proposed rules for cannabis growers in a move to kickstart the state’s new recreational marijuana market. Businesses will be eligible to apply for three types of cultivation licenses, with plant counts ranging from 201 to 4,500. Growers with more than 3,500 mature plants will pay an annual perplant fee of $22 versus $18 for smaller farms. Licensees will be able to increase their counts in 500-plant increments through an annual application process. The Cannabis Control Division plans to begin processing cultivation license applications no later than Sept. 1, with sales to begin no later than April 2022.

New York Months after the state health department proposed a ban on delta-8 THC, New York banned that cannabinoid and other THC isomers derived from hemp. New York did make small concessions to hemp producers in an updated batch of regulations, removing a requirement that all cannabinoids over 0.05% be listed on product labels. New York is going to keep its proposed ban on hemp pre-rolls, cigarettes and any “flower product labeled or advertised for the purpose of smoking.” But the state health department said it will allow the sale of hemp flower as long as it is not branded as an item for smoking.

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Oklahoma An Oklahoma judge ordered the 60-day suspension of a rule requiring medical cannabis businesses in the state to use the Metrc seed-to-sale tracking system that regulators had contracted for the service. Special Judge Pandee Ramirez of the Okmulgee County District Court is overseeing the case, which questions the Oklahoma health department’s authority to require more than 10,000 MMJ licensees to pay for the Metrc system. Separately, Oklahoma made several significant changes to its medical cannabis laws with the passage of a new bill. The measure enables businesses to transfer licenses after an ownership change and allows the state tax commission to collect a fee to audit cannabis businesses.

Rhode Island State cannabis regulators halted a lottery that was to license six new medical cannabis stores in Rhode Island in early 2021. The selection process is on hold until at least August, since one applicant filed an appeal after it was deemed unqualified. The appealing company, Atlas Enterprises, proposed a dispensary in Newport but was denied on the grounds that it failed to provide evidence of zoning compliance, among other reasons. A Newport ordinance does not allow retail marijuana facilities in the city.

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IndustryDevelopments | International & State South Dakota Physicians in the state are divided about recommending medical cannabis, an issue that could constrain the development of a market in South Dakota. Melissa Mentele, who spearheaded the medical marijuana legalization campaign, said physician hesitancy not only could stunt the program’s rollout but also could result in “doc-in-a-box” facilities that recommend MMJ without providing sound medical advice. A market launch is expected in summer 2022.

Texas State lawmakers passed a watered-down medical marijuana expansion bill that would raise the THC cap from 0.5% to 1% and add all types of cancer and post-traumatic stress disorder (PTSD) as qualifying conditions. The Texas House approved the amended Senate version on May 28 and sent it to Gov. Greg Abbott for his signature. The Senate-amended measure lowered the THC cap from the House version of 5% and eliminated chronic pain as a qualifying condition. Chronic pain generally is one of the leading conditions that qualify to be treated with MMJ.

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Washington state Gov. Jay Inslee signed a bill into law that strengthens a social equity program enacted in 2020 to provide more marijuana retail opportunities to minority businesses in the state. The measure expands and further defines a social equity program that provides retail license priority, grants and other technical assistance to individuals from communities disproportionately impacted by the war on drugs. Separately, lab-created products made from hemp are temporarily banned in the state, according to the Washington Liquor and Cannabis Board, which oversees marijuana products.

West Virginia Nearly four years after West Virginia voters legalized medical cannabis, the state’s Office of Medical Cannabis is allowing eligible patients to register for the program. Regulators have been awarding business permits since October. West Virginia has a wide range of medical ailments that MMJ may be used to treat. To register for the program, patients must first obtain a recommendation from a physician. Sales via West Virginia’s MMJ dispensaries are projected to reach up to $700,000 this year, according to the 2021 MJBizFactbook.

Note: Entries sourced from MJBizDaily, Hemp Industry Daily and other international, national and local news outlets. These developments occurred before this magazine’s publication deadline, so some situations may have changed.

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SCALE How it Suits You From securing licenses to M&A, cannabis companies looking to grow have more options than ever By Omar Sacirbey

Cannabis grows at one of the cultivation sites Driven by Stem owns in Oregon. Photo by Bob Williams

42 MJBizMagazine | July 2021

any marijuana executives share the goal of growing their businesses, but how they achieve that can take many different avenues. Just ask Adam Berk, the CEO of Driven by Stem, a vertically integrated business operating in five states, and Josh Genderson, CEO of Holistic Industries, which operates in six states plus Washington DC. Berk, the founder of food-delivery service company Osmio, which became Grubhub, focused on establishing brands, proving them in a tough market and then taking them into other states through M&As. The arrival of COVID-19 compelled Berk to update his strategy. “For us, it’s all about e-commerce and delivery and building brands,” he said. Genderson, the CEO of a well-known family liquor store business in Washington DC, didn’t plan to take his medical marijuana business national, but his first success highlighted the opportunities that awaited. Genderson scaled Holistic Industries by winning licenses in limited markets and establishing regional presence to build brand recognition. Success bred capital raises that have allowed Holistic to add M&A to its scaling toolbox, but securing licenses remains central to its strategy. “Our bailiwick has been limited-license states. Those give you a natural competitive advantage,” Genderson said.

COMPANY Driven by Stem HEADQUARTERS Boca Raton, Florida CEO Adam Berk OPERATING IN California, Massachusetts, Michigan, Nevada and Oregon

EYES ON EXPANSION Stem launched in 2016 in Oregon, and Berk says scaling and going national was the plan from the get-go. Berk chose to start the company in Oregon because it was a mature market with some of the best cannabis expertise in the country. He figured his young company could partner with or acquire and learn from veteran businesses and then take that expertise national. “It gave us the ability to build a successful brand in a competitive landscape, which is where we think the entire country will be at some point,” Berk said. Oregon has “a robust market and has been around for a long period of time.” Stem acquired two well-known cultivators in the state, purchasing

TJ’s Garden in 2017 and Yerba Buena in 2018, “drastically” expanding the business’ footprint. The company also partnered with dispensary operators in Oklahoma to launch a Stem-branded dispensary there, and it launched the Travis X James (TJ’s) cultivation brand in Nevada. Stem also built out an extraction division that used solvent and solventless techniques, allowing it to expand its edibles company, Cannavore. Finally, the company built three wellknown dispensaries in Oregon operating under the TJ’s brand name. The company also manages another grow operation there, called Chunky. Berk figured it was important to be in California because of the market’s size

Some marijuana business executives launch with the intention to of scaling from Day One, while others don′t consider expanding until years later. There are many different ways to scale successfully, depending on the type of business and the ambitions of its leadership. Some key issues and factors to keep in mind when scaling a company include: • To justify scaling a business, there must be demand for the companyʼs products and services. Executing your growth strategy will require access to capital. • Acquisitions are an effective strategy to scale fast, but they typically require significant capital expenditures. • Many cannabis businesses have scaled their companies by winning licenses in different states, which is often a slower process than M&A but still capital intensive. • Many cannabis businesses that scale do it with a combination of acquisitions, securing licenses and contracting partners who can help build their brand. • Before you scale, it is important to establish your brand, proof of concept and standard operating procedures—all of which will facilitate scaling.

and the innovation happening there. In 2019, he acquired Foothills Health and Wellness, a well-known medical marijuana dispensary near Sacramento. That same year, Stem became an investor in Rebelle, a dispensary in Great Barrington, Massachusetts, that opened in 2020.

SCALING WITH DELIVERY

During the COVID-19 pandemic, Berk noticed boxes piling up on his doorstep and his neighbors’. “We realized that the future was going to be delivery. Once you started to see that trend, and curbside (pickup), we realized that we needed to be in that last-

July 2021 | mjbizdaily.com 43

SCALE

HOW IT SUITS YOU

mile delivery business,” Berk said. “I also knew from building Osmio that it would take two years, and I felt like we didn’t have two years.” To shave time off the process, Berk sought to acquire a cannabis delivery company, and he found one in Driven Deliveries. At the time, Driven was the second-largest cannabis delivery company in California, with 250 drivers, roughly 500 SKUs and 25 vendors on the platform. The deal—valued at $31 million when it was announced—closed Dec. 30, 2020, and the company became known as Driven by Stem. “They were acting almost like an Amazon, where they would bring the products into their distribution centers and do a B2C delivery. We really liked that model, so we acquired them. Now our goal is to expand that platform,” Berk said. The idea is to expand Driven into new markets and go deeper in the states where the company already has a footprint. “We will lead with e-commerce and delivery, and then right behind that will be all of our brands, knowledge, know-how and IP. So we want to get connectivity with the consumer, No. 1, and then be able to bring right behind it our own products,” Berk said. “It’s innovative, it’s disruptive. … And it helps give us a competitive advantage. It’s very important having that connectivity to the consumer day-in and day-out.” The acquisition of Driven played to Berk’s strength as an e-commerce and delivery pioneer in another industry. It also meant he could provide answers to questions about user interface, SEO strategy, logistics, artificial intelligence technology, selecting and coordinating routes, crafting standard operating procedures, public relations and marketing strategy and more.

OREGON REPRISED

The first test of this strategy took place this May, when Driven launched its delivery services in Oregon. It also

44 MJBizMagazine | July 2021

When starting a marijuana business about five years ago, Driven by Stem CEO Adam Berk first purchased two cultivation companies in Oregon. Photo by Bob Williams

announced that it would expand into Michigan by Labor Day. To prepare for the launch of Driven by Stem delivery in Oregon, Berk said his team spent April and May buying cars, outfitting them with lockboxes and GPS tracking, hiring and training drivers, logistics coordinators and a pick-andpack team, plus obtaining insurance and payroll processing. The company also integrated its back-end technology with Metrc, the seed-to-sale system mandated in Oregon, so that when users come into the e-commerce and delivery portal, they can pull up Driven by Stem’s menu in real time. At press time, Driven by Stem engineers were building the front-end interface. “So, when a user comes in, we’ll know who they are, what city they are in, user preferences, whether they are in the delivery zone and any sort of specials for the day,” Berk explained. “Once that component is completed, then we will be able to execute.”

DEMAND-DRIVEN

While Berk has decided that Driven will be the battering ram that takes his company into other states, he must now decide what markets to enter based on factors such as demand. “We look at the demand curve and make sure that there is a need and a want for this sort of service, which we believe most states have,” Berk said. “Any type of licensing opportunities that are available. And then, can we execute in that market in a cost-efficient way? All three of those things play into where we’re going to go next.” Markets that Berk’s company likes include Colorado, Illinois, Maryland, New York, Virginia and Washington DC because of high demand. “It’s the same model: same cars, same lockboxes, same hiring practices, same interview processes,” Berk said. “It’s a rinse-and-repeat model. And that really makes the scaling a lot more cost effective.”

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Holistic Industriesʼ retail stores, such as this one in Somerville, Massachusetts, operate under the brand name Liberty. Courtesy Photo

COMPANY Holistic Industries HEADQUARTERS Capitol Heights, Maryland CEO Josh Genderson OPERATING IN California, Maryland, Massachusetts, Michigan, Missouri (pending), Pennsylvania, Washington DC, West Virginia (pending)

BEAST OF THE EAST Genderson, a fourth-generation co-owner of Schneider’s of Capital Hill, a 72-yearold family liquor store in Washington DC, won one of the city’s first grower/processor licenses. In 2012, scaling wasn’t part of Genderson’s plan for Holistic. “Initially, I thought it would just be a fun side project,” Genderson said. But Holistic was doing well in Washington DC, and Genderson spotted new opportunities as markets opened along the East Coast. He focused on limited-license states that allowed vertical integration and then, in 2014, applied for licenses in Massachusetts and Maryland, followed in 2016 by Pennsylvania. All three vertically integrated licenses were awarded in 2017, and Genderson opened them under the brand name Liberty.

46 MJBizMagazine | July 2021

“I got them built, “We’re very cognizant set them up, got them of trying to apply and win operating, got stores open licenses in states that would in all those states and add to our regional concenbecame vertical—with a tration,” Genderson said. big emphasis on wholesale “Being able to drive up and and retail. We’re on every down the Northeast and the shelf in every one of those mid-Atlantic and the Midwest states,” Genderson said. and seeing our brands and Josh Genderson He explained that having our stores—and people know retail stores in addition they’re in a Liberty store, to wholesale product helps build whether you’re in Massachusetts or Maryrecognition for Holistic’s brands. land—it really adds value to the company.” “We try to be on every shelf in every RAISE AND SCALE (market) that we’re in,” Genderson said While winning licenses and building with regards to his wholesale efforts. regional presence remain the linchpins “Brand equity is really important.” of Genderson’s strategy, he hasn’t shied Building regional presence is critical away from raising capital so Holisitic to Genderson’s scaling strategy, mainly could pursue an M&A strategy. because it aids in brand building.

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State Stance on Vertical Integration By market type

Allows

Vertical integration stance by market type.

Prohibits

OR SD

PA IL

Allows 21

Recreational (11)

SC MS

CT NJ DE MD

NH MA RI

Prohibits 1

Allows 9

Prohibits 2

Requires 1

Medical requires/ recreational allows

Medical (37)

Requires 14

Requires

FL HI

Source: MJBizFactbook

“We raise capital not only to keep up with our public competitors but also to do accretive transactions and bring in more assets—and to continue to follow this regional strategy,” Genderson said. Before winning the three East Coast licenses in 2017, Genderson felt confident enough about his company’s prospects that he raised $40 million in 2016 from family and friends to use toward facilities in those markets and to expand elsewhere on the East Coast as well as in California, which had just passed Proposition 64, the state’s recreational legalization initiative. Even though it went against Holistic’s limited-license state strategy, the company bought retail licenses in Los Angeles, San Francisco and the San Fernando Valley in 2018. “California is very competitive and very mature, but it’s also the world mecca for cannabis,” Genderson explained. “If you can make it there, you can make it anywhere.” While acquiring and building out assets in California, Holistic raised

48 MJBizMagazine | July 2021

another $55 million in 2019 and successfully applied for licenses in Michigan, Missouri and West Virginia. “We continue to prove that not only can we do it in East Coast, regulated markets that had moats around them, but we can do it in hypercompetitive markets like California,” Genderson said. In May of this year, Holistic secured a $55 million convertible note to launch its Missouri and West Virginia operations and break into new markets such as Illinois, New Jersey and Virginia, where it has already filed license applications.

TIMES FOR M&A

Although winning licenses is Genderson’s preferred route when it comes to scaling, he said M&A is always an option when circumstances merit such an action, as California showed. Another situation that merited an M&A move arose in Maryland, where businesses are allowed to have up to four retail stores. Holistic won one grow license, one processor license and one

retail license. Since it couldn’t apply for any more retail licenses, the company did “tuck-in acquisitions,” buying stores in Baltimore and Prince George’s County to complement the store they already had in Montgomery County. “We’ll do M&A when there’s not a license to be won. If there’s a license to be won, we generally try to go that route, because we’ve had a lot of success that way,” Genderson said. “As things progress, and as there’s more consolidation and as the federal government moves in, we’ll look at M&A a little bit more broadly. Because buying revenue and buying mature assets can be really accretive if you do the right deal,” Genderson said. “A lot of the licensing, a lot of the applications that we won are assets that are being built out now. Those will continue to open and will add to our scale, add more revenue and more EBITDA,” Genderson said. “I think M&A will play a more crucial role now that you’re seeing so much consolidation.”

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The

Budweiser of By Omar Sacirbey

A meticulous scaling plan helped one Maryland medical marijuana cultivator become a greenhouse-growing giant

Cannabis

n 2002, Jake Van Wingerden bought 45 acres of land that included a 60,000-square-foot greenhouse in Earleville, Maryland, where he started Tidal Creek Growers. The company produces bedding plants that are sold at local and national gardening centers, including Home Depot and Lowe’s. Today, Tidal Creek has 620,000 square feet of heated greenhouse plus 17 acres of shade houses and outdoor fields between two facilities. Now, Van Wingerden is replicating his scaling act, this time with cannabis flower. His company, SunMed Growers, was one of 15 cannabis businesses to win a cultivation license in 2016. It started with roughly 70,000 square feet of greenhouse but is well on its way to a half-million square feet. “We have always taken the business approach of being the Budweiser brand. Plentiful, fully available, reasonably priced and good-quality products. There are other players in the marketplace that are artisanal, handcrafted, top-shelf products. That’s not us. SunMed is about scale and volume and reasonable prices,” Van Wingerden said, noting that the company sells anywhere from 500 to 700 pounds of biomass per week. “My motto is, ‘I’d rather make a little on a lot than a lot on a little.’”

DETAILED MASTER PLAN

Van Wingerden intended to scale SunMed from the get-go and started with a detailed master plan that laid out the final size of the facility. It

50 MJBizMagazine | July 2021

included locations for the When looking greenhouses, offices and to other states for rooms for drying, curing comparisons, Van and processing as well as Wingerden focused electrical and plumbing on Arizona’s medical configurations. market because of “We did our site work, how the program was utilities and underground to designed, the way accommodate that master patients were signed up plan,” Van Wingerden said. and the way businesses “We laid out a half-million were distributed across Jake Van Wingerden square feet from Day One.” the state. The first phase was a build-out of “If you watch Arizona’s marketplace, roughly 70,000 square feet of greenhouse it’s grown exponentially—much buildings. About 2½ years ago, SunMed faster and much larger than anybody decided to start Phase 2, which included anticipated. And so that gave me a lot a build-out of roughly 160,000 square of confidence in making decisions to feet to be completed in late 2020 at a cost scale because it takes two years to do of about $18 million. these projects,” Van Wingerden said. The company has raised the capital “Those decisions two years ago are for Phase 3—a 250,000-square-foot what’s happening today in the business. build-out—and started the permitting And it was a great decision because and engineering work. “We intend two the increased production that we have years from today to be at a half-million right now is being sucked up by our square feet.” marketplace. It’s like a dry sponge.” He also expects Maryland to open a GAUGING DEMAND recreational cannabis market similar to Van Wingerden based the size of his the one Arizona launched in January. facility partly on the speed at which “The risk of building additional Maryland’s medical cannabis program production space is less because we was growing and partly by looking at know the recreational market is on the other states. horizon,” he said. “When we turned on the facility LESSONS LEARNED from Phase 1, we immediately entered a While Van Wingerden started with a marketplace that was rapidly growing,” detailed plan for his multiphase scaling Van Wingerden said of Maryland. “The patient count and the monthly retail sales project, he wasn’t afraid to change things midstream, depending on what he count, it seems like every year or learned from one phase to the next. After 18 months it doubled.”

growing in their Phase 1 facility for about 18 months, SunMed “learned all sorts of lessons” in areas such as irrigation, space utilization and lighting. For example, SunMed started with conventional, high-pressure sodium lights, which are inexpensive but cost more long term versus LED lights that are more expensive but create savings in energy bills. “We took those lessons that we learned and made changes to our Phase 2 design. And once we put Phase 2 into service, we went back and retrofitted Phase 1,” he said. “We’ve also made changes to our fertigation practices after a lot of trial and error. … We started out with an ebb-andflood, sub-irrigation system, which did not work for us. So we went to a top-down dripper system,” Van Wingerden said. And because Maryland gets very hot and humid in the middle of the summer, SunMed upgraded its HVAC systems.

COVID DELAYS, COST OVERRUNS Delays and cost overruns are perpetual problems when scaling, but the coronavirus pandemic has made them worse, Van Wingerden said. SunMed was in the middle of construction when COVID-19 hit and the federal government enacted travel bans that prevented Van Wingerden from importing the Dutch-style greenhouses and equipment that he favors from the Netherlands. Additionally, the Dutch workers who assemble the turnkey facilities were unable to come to the United States as planned. While travel restrictions were eventually lifted, the delays were a setback. Van Wingerden also said construction materials prices have “gone through the roof ” in the past year, driving the cost of expansion even higher. “We’re seeing 30% and 50% increases from just two years ago on steel and aluminum pricing. And we’re seeing those costs increase every month right now. If someone’s looking to start a project, my recommendation is budget 30% more

In two years, SunMed CEO Jake Van Wingerden expects the company to have 500,000 square feet of greenhouse space for cannabis cultivation. Courtesy Photo

than what you think it is. Because things are not getting cheaper,” he said. Van Wingerden also warned of “a cannabis premium associated with construction. Most of the people that you deal with are savvy enough to know that the product you’re growing has a very high profit margin. So they’re adding 20% to 30% to their price because they can get it. That’s definitely a factor in the marketplace. I operate on both sides of that coin. “Those delays were definitely a large hit for us,” Van Wingerden added. “But we pushed through it, because the demand for medical cannabis was also surging at the same time—all over the country, as well as in Maryland. So we pushed to the finish, and it definitely cost more than we budgeted, longer than we budgeted.”

SECURITY WHILE SCALING

Another issue when scaling is security and compliance. There are contractors “all over” the construction site, Van Wingerden said, making it important to “keep a perimeter between your active growing facility and your active construction facility.” SunMed demarcates the two zones with a “bright yellow line” and “keeps a security presence to stay compliant with our state regulations” Van Wingerden said, explaining that “the state regulates the presence of our badged employees versus the unbadged visitors.” Working with the state, SunMed created a plan for how the construction would

be done securely, including keeping nonSunMed workers in the construction zone and away from plants and product. Other precautions involved arranging for some work to be done at night or on weekends, such as installing sprinkler systems above the packaging area. SunMed chose to install the fire-safety features when the packaging department was not working so there was no chance an installation mishap would set off the sprinklers during packaging and soak employees and products. With the final phase of his cultivationscaling plan underway, Van Wingerden is now moving in other directions. In April, SunMed acquired a processor license from another cannabis company in the state and launched SunMed Labs. The new processing division will be housed in a lab that is already built on SunMed’s site and expects to have its first infused and concentrated products available in Maryland before the end of the year. For Van Wingerden, it’s another step that will generate future revenues and potentially more growth. “Success in business is defined by sales first, profitability second. We were profitable within nine months of operations, and we’ve been profitable ever since. Then we started paying back our investors with their original capital,” he said. “You actually have a balance sheet and (profit and loss) information to report. And if you’re profitable, and you’re paying them their money back ahead of the original plan, you get investor confidence. And away you go—you can pitch scaling.”

July 2021 | mjbizdaily.com 51

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Brand Expansion By Bart Schaneman

Manufacturing companies take several paths when adding new states to the brand portfolio

s marijuana edibles brands become successful, more companies are looking to expand their product lines beyond state borders. But this is the cannabis industry, and nothing is as simple as it would be in mainstream business. To successfully grow a multistate business, marijuana edibles brands must navigate myriad obstacles as they expand, including: • Understanding how compliance requirements and regulations differ from state to state. • Finding reliable partners that will uphold the brand’s vision and standards. • Identifying which markets will be lucrative based on criteria such as population size and competition.

DECIDING WHERE TO GO

Some companies seem to believe any state where they can sell presents a good opportunity, while others carefully select each new market. Oakland, California-based Kiva Confections is more in the latter camp. The company’s edibles are sold in about a half-dozen states beyond California. Kiva moved into Ohio’s medical marijuana market at the end of 2020. Co-founder Kristi Knoblich Palmer said her company prefers to expand to states that have a large population or patient pool and will likely impact neighboring states. Ohio fit that bill. “Influencer states are the most interesting to us,” she said, citing New York and Massachusetts as examples of

52 MJBizMagazine | July 2021

Scott Palmer and Kristi Knoblich Palmer

markets that have large populations and affect the surrounding regions by drawing consumers from neighboring states. Cameron Forni is the founder and president of Select, the edibles brand owned by Curaleaf, a Massachusettsbased cannabis company that has business licenses in 17 states. Forni looks at the following criteria when deciding which states to enter: • Market size. • Patient pool. Cameron Forni • Regulations. • Allowable products. “If you want to be a pioneer in this industry, you have to stay up-to-date on each and every one,” he added. “(Pay attention to) the health association, the state cannabis industry association, the regulatory boards.”

Cameron Clarke, co-founder and CEO at cannabis consumer packaged goods business Sunderstorm in Los Angeles, said the company will be expanding its Kanha line of gummies to Colorado, Massachusetts, Nevada and Utah. Clarke agrees that market size is a key factor when evaluating a potential new state for its business opportunities. He prefers to stay away from states that require vertical licensing, such as Florida. Western states, meanwhile, tend to be more business friendly, he said. Jeremy Goldstein, co-founder and chief operating officer of Stillwater Brands, which manufactures a watersoluble cannabis product in Commerce City, Colorado, said the company’s strategy avoids expanding to every available state. Stillwater was founded in 2015 Jeremy Goldstein and sought to build up its portfolio of products and presence in Colorado to ensure it was rock solid before branching out. “We’ve always looked at where the market will be ultimately and never operated out of a short-term fear of missing out,” he added. Stillwater is moving into Michigan next but won’t be licensing with a partner. Instead, the company is building its own production facility. “We recognized that, at some point in time, cannabis will be federally legal

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and you’re going to have interstate commerce,” Goldstein said. That prediction made Stillwater want to spread facilities across the country, and Michigan offers a solid location with a good-sized market, according to Goldstein.

NAVIGATING STATE REGS

The cannabis industry is notorious for having business regulations that vary wildly from state to state. That can either be a huge challenge for a company looking to expand—or, with the right person or team dedicated to understanding the differences—a Cameron Clarke problem that can be easily solved. Sunderstorm’s compliance team helps its executives navigate the complexity of state regulations. For example, the team would discourage leadership from entering a state such as Florida, which has significant barriers to entry for a new MMJ business. “But we don’t find the regulatory framework daunting,” Clarke said.

The amount of THC allowed in a given edibles package varies by state. Courtesy Photos

54 MJBizMagazine | July 2021

For its part, Curaleaf ’s Select has plans to sell products in 34 states, and Forni said discerning the regulatory differences in each market can be a challenge. “They all reinvent the wheel,” he said. “There’s no set regulatory framework from a national standpoint. Everyone’s trying to make up their own rules and regulations.” For example, some states will allow only 800 milligrams of THC in one container, while others permit up to 1,000 milligrams. Curaleaf has several teams that work together on expansion, but the commercialization team focuses on national product launches. Goldstein said he likes Michigan’s regulatory setup, adding, “There’s nothing too onerous.” The state has fewer advertising restrictions than Colorado. Michigan also allows social consumption lounges, which could be a boon for infused product companies.

VETTING PARTNERS

Most cannabis edibles brand expansions happen via a partnership in a new state. That can work well if the new partner upholds the company’s brand standards. For Jen Dooley, chief strategy officer at Chicago-based Green Thumb Industries

(GTI), which now owns edibles brand Incredibles, being vertically integrated removes the trust factor from the business. Unlike Jen Dooley infused product manufacturers that source outside cannabis, GTI does not have to work with partners across the supply chain—nor find itself in a tough spot if items don’t arrive as promised. But as the brand expands into new markets, Dooley said GTI is open to working with new partners. Her goal is to create the same experience for consumers no matter where in the country they might find Incredibles, ensuring all products taste the same in every state. “We have to find partners that we really trust and care about quality,” she added. A red flag for Knoblich Palmer at Kiva Confections is a potential partner who wants to get to market as quickly as possible and wants to do it on the cheap. She’s hoping the two companies’ philosophies align. “We’re looking for quality, consistency and flavor,” she said.

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Marijuana-infused gummy edibles typically use starchless technology. Courtesy Photo

King Size

By John Vessa and Kelly Froehlich

our marijuana edibles brand is taking off, which means scaling up production. The big question is: How do you go from a 5-pound batch of gummies to a 30-pound batch while still ensuring the product remains standardized and uniform? Beginners might assume that scaling up a recipe is as simple as multiplying the amount of ingredients. However, creating a scalable gummy recipe requires close attention to formula, process and a basic understanding of the science of candymaking. There are three elements for any successful candy product: formulation, process and equipment. Often, when transitioning from a small batch to a production-size batch, people tend to focus first on the equipment they need and completely forget about adjusting the recipe. Gummies are especially fussy

56 MJBizMagazine | July 2021

Experts say variability in available energy can cook your candy operation

confections when it comes to recipe and process, so both are equally important.

these concepts, especially if you’ve already been working in the kitchen.

QUIRKS OF PRODUCTION

BASIC ASPECTS OF COOKING

Gummy products have unique moisture needs. Once deposited into a candy mold, the product must cool and jell for a specific amount of time to achieve the right moisture level. While most commercial gummies are deposited into starch trays, marijuana-infused gummy edibles rely on “starchless” technology. The process is a lot less flexible when it comes to formula and processing than the more traditional starch molding. In fact, variations in moisture of 1%-2% can have a huge impact on the product’s depositing and setting. These quirks make understanding of basic chemistry of gummy-making important. However, you don’t need to be a scientist or engineer to understand

The basics of cooking and heating are intuitive. Very simply, when you place a hot item next to something cold, the hot item loses heat and the cold object absorbs some of that warmth. As the difference in temperature between hot and cold increases, the heat transfer speeds up. Surface area also plays a role: The more surface area you have, the quicker an item heats or cools. To determine a heating load, or how much energy you need to accomplish a certain task, you should ask the following questions: • How much material are you going to heat? • What is the starting temperature and the target temperature?

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ENERGY NEEDED FOR CANDY PRODUCTION Stage

Degrees

% Solids

kW, 1 hour

kW, 30 minutes

kW, 15 minutes

Thread

225 F

80%

0.42

0.84

1.68

Soft Ball

237 F

85%

0.59

1.18

2.36

Firm Ball

245 F

87%

0.66

1.32

2.64

Hard Ball

259 F

92%

0.83

1.66

3.32

Soft Crack

280 F

95%

0.96

1.92

3.84

Hard Crack

305 F

99%

1.12

2.24

4.48

The table shows calculations to cook 10 pounds of a general confectionery mixture of corn syrup, sugar and water at room temperature of 70 degrees Fahrenheit and a total initial solid of 75%. The table illustrates how many kW it takes to cook that solution to various “candy” stages. These calculations do not consider the amount of energy it requires to heat the pot or vessel you are using. This also assumes no heat is lost to surroundings and 100% efficiency.

• Will there be a change in water content from start to finish—and, if so, how much? • Ideally, how much time do you require for a cook cycle?

heating capacity. An 80-pounds-of-steam boiler would have a similar cooking capacity as a single stock pot gas burner.

FINAL CONSIDERATIONS

SIZING EQUIPMENT CHOICES

Electric Cooking: Most people use electric equipment—whether it’s a hot plate or induction burner. In each of these cases, the kilowatts (kW) at a given voltage is usually stated on a specification sheet. Both are important! If the voltage of a facility is lower than the electric device’s kW rating voltage, the total available kW will be less—and you must take this difference into account. To learn your facility’s voltage, inquire with the maintenance department or take a voltage meter and measure it at a receptacle. If equipment is rated at 240 volts single phase and is supplied with less than 240 volts, the kW will be derated. At 230 volts, the output is 92%; at 220 volts, the output is 84%, etc. If you have an electric cooker rated at 10 kW and 240 volts single phase that was operating on 208 volts single phase, the available kW would be 7.5. From the table, cooking a 30-pound batch to hard ball stage in 15 minutes requires 9.96 kW (3.32 kW x 3 because the batch is three times larger than the amount listed in the table).

58 MJBizMagazine | July 2021

John Vessa and Kelly Froehlich

Cooking it to the same stage in 30 minutes requires 4.98 kW (1.66 kW x 3). With 7.5 kW available at 100% efficiency, you would expect the cook time to be no less than 22.5 minutes. Gas Flame Cooking: The output of a commercial single stock pot-sized gas cooker can be as high as 80,000 Btu per hour. That rate equates to about 23.5 kW. With the control turned down to about 33%, this cooker will generate the same 7.5 kW as the electric cooker above. With the flame control turned to the maximum, you would expect those cook times to be about one-third of those in the table. That would be 20 minutes, 10 minutes and 5 minutes to achieve the same energy transfer. Steam Cooking: Steam boilers, whether electric- or gas-powered, are generally rated in pounds of steam per hour. A good rule of thumb is 1,000 Btu per pound of steam. A boiler would need to produce at least 26 pounds of steam per hour to have the equivalent of 7.5 kW

This story assumes 100% efficiency, which is rare. Heat loss from hot surfaces is usually not a large part of the calculation, but it should be considered because it may reach as high as 5% of the total available kW. Generally, oversizing by 25% takes care of any losses not specifically accounted for. The most common unknown is the product itself. As candy masses cook, they become more viscous and may not transfer heat very well. In this case, the surface temperature of the cooker must be reduced to avoid burning. Increasing the cooking surface would help, but whether that is practical will depend on the size of your kitchen. John Vessa is a senior application engineer at CandyWorx, a Spec Engineering Brand. Kelly Froehlich is the marketing content manager at Spec Engineering. Since 1979, Spec Engineering, a Gray company, has been a single source for system design and process equipment integration. CandyWorx is a custom equipment and solutions provider for the confectionery, chocolate and cannabis industries. Learn more at spec.engineering and candy-worx.com.

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Multiplying in Executives share strategies for growth in an expanding marijuana market

Michigan By Omar Sacirbey

ichigan is fast becoming one of the nation’s leading marijuana markets, and many cannabis executives are vying to rule the state. MJBizMagazine spoke with two Michigan cannabis executives whose companies are in the midst of scaling for their thoughts on what smart growth looks like in a rapidly growing market where adult-use sales launched in December 2019.

START SMALL AND ESTABLISH YOUR BRAND Gage Cannabis • Detroit

Gage Cannabis always sought to be one of the largest cultivators in Michigan, but the business started small, according to CEO Fabian Monaco. The company opened its first dispensary in September 2019—shortly before adult-use sales began—followed by two cultivation sites in 2020: one 12,500 square feet, the other Fabian Monaco 17,500 square feet. Together, the two facilities produce about 400-500 pounds of cannabis flower per month, which vertically integrated Gage sells through its own retail channels. The company opened three more stores in 2020. When Gage started, the company intended to use its small cultivation facilities and retail outlets to establish brand recognition for its cannabis products before going big, Monaco explained. “We focused on funneling all the product we grew into our retail channels. We built the narrative around the brand. We controlled how the consumer received the brands, how they interacted with the brand at retail,” Monaco said. “Once we had that brand validation in the market, then we really had the confidence to go big.” Gage opened a third cultivation facility in 2021, essentially doubling the company’s canopy space, Monaco said. That facility became Gage’s “flagship” grow that the company would use as a “showcase,” Monaco said. Gage has opened five more stores so far in 2021, bringing its total to nine. To support those retail outlets, Gage also has five contract growers for a total of eight cultivation facilities, including three of its own.

60 MJBizMagazine | July 2021

Gage-grown cannabis makes up about 60% of the companyʼs retail offerings. Courtesy Photo

SCALING WITH CONTRACT MANUFACTURERS

Contract manufacturers have been a key part of Gage’s scaling strategy. “We’ve ramped up our cultivation with our contract growers. And as we continue to open up retail, I think the contract growing is also a big differentiator for us in the industry,” Monaco said. Gage’s own products make up about 60% of its sales, with the other 40% coming from other cultivators. If a certain cultivator’s product is performing especially well, Gage will explore inviting them to become a contract grower, pending appropriate vetting. “We thrive in identifying great cultivators and then asking them to join the family,” Monaco said. “It’s kind of a step-by-step progression and process, where you buy wholesale from them, then you give them a couple of your own genetics to see how they perform with your stuff. And then they grow for you.” Gage makes about 50%-53% gross margins with contract

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growers, Monaco said. He added that the company would consider acquiring the growers, as that would increase margins to 70% or more. Although with the current arrangement, Gage doesn’t have to make capital or operational expenditures on behalf of contract growers. “It’s a very capital-light model,” Monaco said. “We basically get our own product on the shelf at zero cost and split the retail price with that producer.”

DEMAND AND OTHER FACTORS FOR SCALING

When considering whether and where to open a new cultivation site or bring on a new contractor, Monaco first considers demand, followed by market potential. He added that success lies in making sure your cultivation facilities are producing the right amount for your retail outlets.

“You’re scaling your retail as you’re scaling your cultivation to make sure that they stay neck and neck based on the demand that you have from your retail,” Monaco said. For example, by mid-2020, Gage had opened five stores, but production couldn’t keep up with demand. So Monaco resisted opening more stores until the company had launched its third cultivation site and enlisted contract growers to meet demand. Only then, in January 2021, did they open their next store. “We had to slow down a bit when it came to opening retail because we were buying so much wholesale product,” Monaco said. “As our cultivation went from two facilities to now eight sites—soon to be nine—that gives you the confidence to say, ‘OK, now you can open up more retail.’ It’s just trying to manage both.”

PROOF OF CONCEPT

Lume Cannabis • Troy, Michigan Before joining Lume in September 2019, Vice President of Retail Operations Michael Dowdell had spent 16 years with Bose Corp., a Boston-based soundsystem company. While at Bose, he helped grow the company from 100 to 175 stores. His mandate at Lume is to help the Michael Dowdell company reach 100 stores by 2025, up from around 30 currently. “We like to go fast. We open a lot of stores, and that’s a fun model,” Dowdell said. Lume started with a cultivation facility that fed a so-called proof-of-concept store, both in Evart, Michigan. The purpose of the first store was for Lume to craft and hone its processes and procedures so they could be easily replicated in future stores. “I brought some of that discipline that you need to standardize things, because w And, as you expand, it can get watered down,” Dowdell said. “So we just began to better document our standard operating procedures (SOPs). We created an employee manual on the human resources side, and we created a standard operating procedure guide on the retail side. If I drop an employee from one store off in any other store, they’d be able to function within 15 minutes.” But standardization can be limited by the unique traits of individual retail locations, Dowdell cautioned. “(SOPs) are the same from store to store, taking into account the unique layouts and other things about how the store is designed,” Dowdell said. “It’s a constant evolution of documenting procedures, with the exception of the processes that are store specific. And that’s going to be your curbside

62 MJBizMagazine | July 2021

Lume Cannabis standardizes processes between stores. Courtesy Photo

process, or how you move your inventory in and out of the store. Because some stores have bigger inventory rooms, some stores have a separate inventory room. We make minor adjustments for that, but overall, we try to standardize as much as we possibly can.”

WHERE TO SCALE

When it comes to choosing where to locate stores, Dowdell advises executives to seek out markets with “a decent amount of traffic in the surrounding areas.” Dowdell acknowledged that not all municipalities will allow marijuana businesses, and companies might have to pick towns based simply on whether they are permitted to operate there. “We follow the marketplace. And we looked for organizations that were also going to open up recreational sales in the near future. It’s never a guarantee, but we tried to target markets that were open and that were going to go recreational fairly soon,” he said.

Lume currently has 31 stores, most about an hour away from one another. However, Dowdell doesn’t worry about his stores cannibalizing one another. “Each market is different. I think we have a couple stores that are 20 minutes from one another, and they all do fine,” Dowdell said. As long as the demand is there, the distance between stores doesn’t matter, he added.

TIMING PERSONNEL

Another challenge is coordinating payroll with the opening of a store. Because of regulations and an unpredictable approval process, it’s difficult to forecast the day when a store will open. At the same time, businesses must have employees hired and trained in advance of the opening and on the payroll. If there is a significant delay between when an executive believes a store will open and when it actually opens, the company could end up paying retail employees before they have sold anything. “You have a staff that’s trained and ready to go, and sometimes you don’t have anything for them to do because we got delayed. There’s nothing I can do about that, but we’ll find something for them to do,” Dowdell said. For example, now that there are stores within one hour of each other, it’s easier to send new employees to different

stores to shadow other employees and learn from them. “We end up with a better trained salesforce now because they’re able to go and work in a real store before their stores opens. … So now we open up with a team that’s much more experienced.” Lume also tries to standardize the hiring of leadership teams, according to Dowdell. The company tries to have store managers hired and ready to start 90 days before a store opens, while assistant managers start about 60 days before launch. The company hires the rest of the leadership team about a month before the store opens, and then the staff starts up to two weeks before the store opens, Dowdell said. “It’s important to standardize the follow-up training. That was one of the things that we got better at as we were opening,” he added. “We had standard training, but we needed to do more follow-up training to make sure that everyone was learning new things and as new products came out.”

Omar Sacirbey is a reporter for Marijuana Business Magazine. You can reach him at omar.sacirbey@mjbizdaily.com.

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Board

Filling seats on your board of directors is getting easier as industry expands

annabis companies can lure talented professionals to join their boards more easily than they could just a few years ago, experts say. Businesses in search of a new board member commonly task their own executives with filling the role or engage one of a growing number of recruitment agencies to find the right placement. Those in search of board members seek

experienced individuals who align with their company’s goals and strategy as well as complement current leadership. “A few years ago, not many people would want to say they’re on the board of a cannabis company,” said Liesl Bernard, CEO of California-based recruiting firm CannabizTeam. “Today, it’s much more of an exciting, sexy industry to be in. And the conversations are a lot easier to have with executives. They almost feel

like it’s a plus that they are part of the cannabis industry versus something that they would want to hide.” In January, CannabizTeam responded to client demand by launching its CT Board Placement service. The division assists clients in the cannabis industry with identifying and recruiting candidates for board of directors positions. It also helps first-time board members learn the culture and nuances

July 2021 | mjbizdaily.com 67

Building the

Board

of the company they will serve as well as the broader cannabis industry. Marijuana businesses typically seek board members with experience in financial reporting, retail and branding, testing and product safety or fundraising and capital formation, Bernard said. “It’s obviously a very select group of people that we’re targeting,” she said. “Most of the time, it’s more of a proactive outreach to these candidates versus placing an ad and hoping people will apply for it.”

WHERE TO START New York-based hiring agency ForceBrands also helps consumeroriented marijuana companies find board directors and advisers. The agency works with businesses to understand their growth plans and recruits executives from adjacent industries such as food, beverage and beauty product retailers. Before ForceBrands starts searching for board candidates, the agency assesses its clients’ business and culture, said Sean Conner, co-founder and chief progress officer at ForceBrands. “What you really want to think about is: Who are the people that are going to help me get to these next five milestones over the next three to five years?” Conner said. “It’s not just the name, it’s someone that you can actually feel comfortable picking up the phone and having direct access to because they really care about the brand and the business that you’re looking to build and structure.” Once companies identify their business goals—such as growing sales or launching new products—they can seek directors with the relevant experience to help reach those targets, he said. Business leaders said they also keep in mind what needs they have on their current working groups and board committees, including those covering auditing and corporate governance.

IDENTIFYING CANDIDATES In February, Agrify announced that Stuart Wilcox, the former chief operating officer

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Liesl Bernard

As the cannabis industry matures, companies are finding it easier to add talented board members from adjacent industries. Recruitment can range from leveraging professional networks to hiring an agency to cast a wider net. Here are some considerations for firms building out their corporate boards:

of multistate operator Curaleaf, joined its board. Agrify, a Massachusetts-based purveyor of grow solutions, wanted someone who could help explain the “customer pain points” that cannabis businesses experience, said Raymond Chang, CEO and chair of Agrify. Chang met Wilcox at MJBizCon in 2019. After Wilcox left Curaleaf, also headquartered in Massachusetts, in September 2020, Chang floated the idea that he take a seat on Agrify’s board and persuaded him over three or four months. In all, Agrify’s board comprises seven directors, including Wilcox and Chang. The company also has a two-person advisory board that offers guidance. “With every single one of my directors, I always try to get to know the person on a personal basis first,” Chang said. “Once I confirm it is the right fit, then I approach them (about joining), and it’s a pretty easy conversation because we already know each other on a personal level and understand that this would be a very complementary and comfortable working relationship.” Regardless of the personal relationships, Chang said he encourages his directors to feel free to “say anything” and “be completely transparent and honest” with their thoughts about his performance and the company. Business leaders frequently fill board seats with friends or colleagues, but working with recruiting agencies gives them access to a wider pool of professionals, Bernard said.

• Understand the next milestones you want your business to achieve and seek out candidates who can provide the insight to help reach those goals. • Develop a process to ensure that potential board members would be a good fit, including selecting candidates you are familiar with, conducting interviews with multiple leaders on your team or using personality assessments. • Perform due diligence such as soliciting feedback from a candidate’s references as well as those in your network who might know the person. • Consider how you plan to compensate board members. Assign a committee to oversee compensation, including a review of how similarly sized companies pay their boards.

“Part of the maturing process within the cannabis industry is for companies to say, ‘We’re willing to step outside of our personal network because we know this is what’s best for the growth of our company, our profile and investor confidence,’” she said.

FINDING THE RIGHT FIT Recruiting firms can utilize interviews and personality assessments to ensure they are finding directors who round out their boards. One such assessment is the Motivational Appraisal of Personal Potential Assessment (MAPP), which screens for talents, interests and motivations. Schwazze added three new board members during the first quarter of 2021 to help oversee the Denver-based,

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Diverse Directors

With every single one of my directors, I always try to get to know the person on a personal basis first.” - Raymond Chang

Cannabis firms want to move away from having corporate boards that are comprised of all men and devoid of people of color, said Sean Conner, co-founder and chief progress Sean Conner officer at New York-based hiring agency ForceBrands.

CEO and chair of Agrify

vertically integrated cannabis company that formerly operated as Medicine Man Technologies. The company has a sixperson board as well as a four-member advisory committee. Due diligence is key during the recruitment process to avoid future board strife and conflicts, said Justin Dye, CEO and Justin Dye chair of Schwazze. “You do your background checks,” Dye said. “You get their references and then you also go find your (own) references that would know of them. You try to get a really good picture of the individual: how they behave, how they get along (with others), how they perform, how they think through things, where their value is, etc.” Candidates interview with Schwazze’s executive team as well as board members. Dye ultimately makes the hiring recommendation to the board, which votes to approve or reject new board members, he said.

SETTING COMPENSATION A board’s compensation committee commonly determines how directors will be paid for their service to the company and its shareholders. Agrify, for instance, has a compensation committee

70 MJBizMagazine | July 2021

comprised mainly of independent directors who benchmark pay against industry peers, including companies of a similar size that also are listed on the Nasdaq, Chang said. Agrify typically provides directors with 50,000 shares through an employee stock-ownership plan. The shares vest during a three-year period, he said. To attract strong board members, larger multistate operators often provide directors with monetary compensation between $50,000 and $70,000, Bernard said. In addition, the MSOs provide 50,000-80,000 shares in equity that vest over two to three years. Involvement with directors varies by company, but most businesses expect at least five to 15 hours of engagement per month, she said. Dye communicates with at least some of Schwazze’s directors on a near-daily basis to update them on business operations or get their input on decisions, he said. “Really good directors are there to think about the shareholder,” he said. “They’re there to drive performance and hold the board and the CEO accountable. They’re there to offer their time.”

Companies must make sure they have a wide range of candidates and prioritize finding board members who are reflective of their markets or customer bases, Conner said. “Diversifying the industry starts at the top,” he said. “The more diversity we have in leadership roles, the more open the dialogue, the better connection with consumers and ultimately the better equipped each company will be to achieve longterm success.” For its part, ForceBrands has connected with associations including the J.E.D.I Collaborative and Project Potluck—groups that support and promote professionals with diverse backgrounds—to expand its pool of diverse candidates. Potential board members also must be considered in an “unbiased” way that evaluates their knowledge, expertise and character, Conner said. It’s common practice for boards to recruit members who are friends with the CEO or colleagues of another board member, said Liesl Bernard, CEO of California-based recruiting firm CannabizTeam. While there’s a “level of comfort” when hiring someone from your personal network, Bernard said it’s beneficial to seek out people who can elevate the current board and add diversity. “By assembling a diverse board of directors, your team will be more likely to come up with innovative solutions that discover unmet needs and new opportunities to reach a wider audience,” she said. – Adrian D. Garcia

BestPracticesInRetail | Solomon Israel

Calyx + Trichomes, a licensed retailer in Kingston, Ontario, relies on a high-volume strategy to make up for limited margins in a competitive market. Courtesy Photo

Getting Prices Right Covering expenses is priority No. 1 when setting prices, retail veterans say

hether they’re shopping in a newly legal market and comparing prices against illicit-market marijuana or weighing prices between a variety of regulated stores in a more mature market, cannabis consumers can be highly sensitive to pricing. Retailers don’t always have much leeway to set their own prices, which might be heavily influenced by supply and demand as well as other external factors. Even so, using a variety of overlapping price strategies can help a marijuana store win customers by appealing to their wallets while keeping the balance sheet in the black.

Cost Approach and Market Approach One common method for pricing products involves finding a balance between the “cost approach” to pricing and the “market

72 MJBizMagazine | July 2021

Daniel Sabet

approach,” explained Daniel Sabet, an accounting and finance manager with Los Angeles-based cannabis industry accounting firm GreenGrowth CPAs. Starting with the cost approach, a retailer tallies up the non-fixed costs of obtaining and selling a given product—taking into consideration things such as wholesale prices and transport costs—then marks up the product to establish a profit. As a starting point, Sabet suggested a 100% retail markup. “Let’s say you’re buying flower from a distributor or from some other wholesaler, and that product’s cost to you is $50. You’d want to sell that in the store for at least $100,” he said. “If you can’t price it at that point, then it’s just not a good buy at all.” After determining that initial markup, Sabet said, retailers can move

For many marijuana shoppers, pricing is the most important aspect of product selection and customer satisfaction. Price environments vary by market, and there’s no single “right” way to price marijuana. However, successful dispensary operators and industry experts suggest: • First ensuring that your prices cover costs and provide profit, then comparing them to competitors’ prices to discover opportunities for higher margins. • Considering the illicit market in any price analysis. • Understanding that cannabis shoppers are price savvy and will quickly discover and take advantage of price differentials. • Seeking out supply deals that can unlock competitive pricing opportunities. • Using tiered pricing to extract value from different types of shoppers.

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BestPracticesInRetail | Solomon Israel on to the market approach to see if there’s room to increase the price. That process involves finding prices for the same product from multiple competitors, then averaging that price across the group to determine what consumers are willing to pay. Sabet said he has encountered marijuana retailers who can afford to have lower markups and slimmer profit margins, but those stores tend to be high-volume businesses. “The store was always packed, and the average ticket price was fairly high,” he said.

Compensating for Limited Margins Calyx + Trichomes, an independent Canadian retailer with one location in Kingston, Ontario, is an example of how a high-volume strategy can work in a limited-margin environment. Like all regulated cannabis stores in Ontario, Calyx + Trichomes can source its products only from a single wholesaler, the government-operated Ontario Cannabis Store (OCS). The OCS is also the sole online seller of legal recreational marijuana in Ontario, meaning it competes directly against the stores it supplies. (However, most legal cannabis sales still take place at private-sector stores.) The OCS wholesale operation sells products to private-sector stores at a 25% markdown from what its online retail division sells to the public, before taxes. That means Ontario retail stores such as Calyx + Trichomes can’t mark up prices very far before getting beaten by OCS pricing. “It doesn’t leave us a lot of room to have promotions or sales,” Calyx + Trichomes founder and CEO Jennawae McLean explained. “We can really only have sales if there’s something we absolutely need to get rid of.” Calyx + Trichomes relies on a heavy sales volume to make up for its limited markups. “We’re just a very high-volume store; we sell about four times more than the

74 MJBizMagazine | July 2021

The government-operated Ontario Cannabis Store sells to the public online and serves as the sole wholesaler to private-sector stores, contributing to a competitive price environment. Courtesy Photo

Jennawae McLean

average store in Ontario,” she said. McLean’s store also includes taxes in its prices. “Our price, after tax, beats what other stores are pricing after tax. The price out the door is always beating

(competitors) by usually around 10%.” McLean believes it’s easy for cannabis consumers to comparison shop online. When prices change, she said, customers notice quickly. Calyx + Trichomes offers customers a price-matching guarantee. For one week, a rounding error in the retailer’s internal pricing spreadsheet resulted in all the store’s prices being 20 cents (25 Canadian cents) lower than they should have been. “When we caught the error that we made, we bumped it back up to the original price that it was supposed to be,” McLean said. “I swear, I fielded six or seven different emails and phone calls (from) people complaining about

our prices shifting all the time, and it was a quarter!”

Considering Illicit-Market Dynamics, Supply and Demand When comparing your store’s prices to your competitors’, don’t forget that your competition goes beyond other licensed, regulated establishments. The illicit market also counts, advised Kris Krane, president at Phoenix-based 4Front Ventures and its Mission Dispensary retail stores in Illinois, Massachusetts and Michigan. “You’re trying to pull in customers—whatever customers you can get—and the whole name of the game in these early, adult-use markets is getting people to convert from the illicit market to the legal market,” he said. The price dynamics of unregulated cannabis vary widely across the United States, Krane added. “If you’re trying to set pricing strategy in a lot of the East Coast, or even in Midwest markets, (illicit-market pricing is) going to be a bit less of a factor, in part because the illicit-market pricing in the eastern part of the country tends to be a lot higher.” Cannabis pricing strategy might also need to change as a given legal market matures over time. In jurisdictions with limited cannabis business licenses, Krane said, producers and retailers have more room to keep prices high as the regulated market launches, when legal production is outweighed by demand. “But as production ramps up, as more licenses are granted, as more stores come online, then that pricing will start coming down and you’ll start capturing the rest of that market,” he said. In Massachusetts, Krane said that efficient, vertically integrated production has allowed 4Front to reduce its retail prices. “Right now, we routinely have $30 and $35 eighths on the shelves

in Massachusetts, where most of our competitors are still selling $50 eighths,” he said. Even retailers who can’t control the costs of their own production via vertical integration can pursue favorable contracts with third-party producers, Krane said. That could include exclusive relationships with producers to bring in high-margin products or forming a “symbiotic relationship” with a new cultivator who agrees to offer favorable prices in exchange for guaranteed bulk sales while they ramp up their business. “That way, they don’t have to go out and do all the work of finding wholesale buyers right when they first open, and you can then get product (for less) that you can sell a little cheaper on the shelves,” Krane said.

Tiered Pricing Gives Options to Consumers Modern consumers expect a range of pricing options. In many consumer packaged goods categories, tiered pricing takes the form of good-better-best. “By companies offering a ‘good,’ a ‘better’ and a ‘best’ product, it means that they can appeal to all types of customers looking for all types of products,” said Liz Connors, director of analytics with Seattle-based cannabis data-analytics firm Headset, who has researched the use of good-better-best price models by marijuana retailers. “It allows us to extract that value from the consumer,” she said. “You pay for the thing that’s worthwhile to you.” The good-better-best pricing model isn’t necessarily limited to three tiers. In a December 2020 report, Connors found evidence of a five-tier price hierarchy among 3.5-gram cannabis flower offerings in Canada’s competitive Alberta retail market. The report categorized these tiers as ultra-value, value, core, premium and ultra-premium.

Liz Connors

Going above five pricing tiers may be counterproductive, warned Connors. “I think five is common; seven is relatively uncommon,” she said. “When we start to get that many tiers, we start to run into a paradox of choice on one end,” she said. “We have too many things to choose from, and we have trouble deciding when we’re given too many choices.” Regardless of the exact number of price tiers a store offers, Connors highlighted the importance of offering customers a range of prices as a market matures. “When a market’s very young, there’s so much demand and so little supply that it doesn’t matter what you’re offering, everybody’s going to buy it,” she said. “But when you start to get to a point where things are becoming saturated, that’s where you need to have a way to stand out to attract the right consumers.” Tiered pricing can also help offset declining prices as a market gets more competitive and price competition gets more intense. “Adding a premium or a core product means that you don’t have to compete in that price war,” Connors said. “Usually, the only person that wins in a price war is the consumer. It’s never the business.” Solomon Israel is a reporter for MJBizDaily and MJBizMagazine. You can reach him at solomon.israel@ mjbizdaily.com.

July 2021 | mjbizdaily.com 75

IndustryPlayers | New Hires & Promotions

Mark Shamber

By Omar Sacirbey

A look at some recent hiring moves in the marijuana industry

Versatile CFO Adds California Supply-Chain Company To Resume

erbl Solutions, a cannabis distributor and supply-chain solutions company in California, appointed accounting veteran Mark Shamber as chief financial officer. Shamber has crunched numbers for Big 4 accounting firm Ernst & Young, sporting giant Reebok, New England hospital system Day Kimball Healthcare and Fortune 400 food distributor and grocery retailer SpartanNash, where he was CFO. But it was Shamber’s tenure at United Natural Foods Inc. (UNFI)—also as CFO—that landed him at Herbl. Shamber spent seven of his nearly 13 years at UNFI reporting to Mike Beaudry, who was the company’s president and later the founder and current CEO of Herbl. He also worked with Jackie Hartwell, another UNFI alum whom Beaudry recruited. Hartwell called Shamber in February to see if he knew any CFOs looking for a career change. In March, Shamber learned his new CEO was hiring another CFO and that he would soon be let go. Shamber then reached out to Beaudry about the CFO post.

Sidney Dillard

 Cresco Builds Board Cresco Labs, a vertically integrated multistate operator headquartered in Chicago, appointed Sidney Dillard to its board of directors.

76 MJBizMagazine | July 2021

“There’s a lot of similarities to the cannabis industry today and where organic foods were in the late ’90s/ early 2000s. That was exciting to me,” Shamber told MJBizMagazine. “I looked at this as an opportunity to (use) all the things that we learned growing the business at UNFI to help the cannabis space as well as Herbl succeed.” What did Shamber do at UNFI that he hopes to replicate at Herbl? “The team and I at UNFI managed the balance sheet and put us in a position to grow,” Shamber said. “I hope to do the same thing here. Whether we need to borrow, raise funds or do it from our cash flow from operations, I want to put us in a position where we’ve got the proverbial fortresslike balance sheet.”

Dillard currently serves as partner and head of corporate investment banking at Loop Capital Markets, one of the largest privately held investment banks in the U.S., where she is responsible for setting and executing the firm’s growth strategy. Dillard serves as lead adviser to her firm’s corporate clients on their capitalraising and advisory needs. Before Loop, she was senior vice president and division manager at The Northern Trust Co., focusing on corporate client services and relationship development. She is also philanthropically active, serving as board chair for the Girl Scouts of Greater Chicago and Northwest Indiana and as a board member for the National Association of Securities Professionals. She also

serves on the Obama Foundation Inclusion Council.

Harborside Buoys Cultivation Team Harborside, a vertically integrated cannabis business headquartered in Oakland, California, appointed Travis Higginbotham Jr. as vice president of production. He will oversee the company’s cultivation, post-harvest, processing and packaging facilities in Salinas, California. Most recently, Higginbotham was co-owner and vice president of sales and business development at The Hemp Mine, a vertically integrated producer of hemp genetics and hempderived products. Higginbotham also served as director of research and development for Battlefield Farms, a 1.8 million-square-foot greenhouse

IndustryPlayers | New Hires & Promotions operation in Virginia where he managed partnerships with 28 global floricultural breeding companies and advised big-box retailers on crop performance, genetic selection and product development nationwide.

Common Citizen Hires Chief Accountant Common Citizen, a vertically integrated cannabis company based in Marshall, Michigan, appointed Dan Rowell as its chief accounting officer. Rowell previously served in financial leadership positions at Book+Street, a management consulting firm; Tosoh America, a technology, biotech and chemical engineering company; and MRI Software, a real estate software company. At Tosoh, Rowell managed a team of finance, accounting, tax and payroll

78 MJBizMagazine | July 2021

professionals responsible for the company’s North American finance and accounting operations. His experience includes budgeting and forecasting, contract administration and management reporting.

Tahir Johnson

 MPP Adds Social Equity and Inclusion Director The Marijuana Policy Project, a Washington DC-based cannabis

policy organization, appointed Tahir Johnson as director of social equity and inclusion. Prior to joining MPP, Johnson was the diversity, equity and inclusion manager at the National Cannabis Industry Association (NCIA) and a patient counselor with MedLeaf dispensary in Maryland. Johnson also hosts a podcast called The Cannabis Diversity Report. Before cannabis, he was in the financial services industry, working as a financial adviser at SunTrust Investment Services and at Morgan Stanley, where he also sat on the diversity council.

Captor Expands Board Captor Capital Corp. appointed attorney Alex Spiro and Bluma Wellness founder/CEO Brady Cobb to its board of directors.

Spiro is a former prosecutor and a well-known litigator who has represented an array of disrupting companies. A graduate of Harvard Law School, where he continues to teach, Spiro has served as a board member of Glassbridge Enterprises, Imedia Brands and Arrive, a private equity venture with Glassbridge Enterprises in partnership with Primary Venture Partners and Roc Nation. Before becoming a lawyer, Spiro studied biopsychology and worked at Harvard’s psychiatric facility, McLean Hospital. Cobb is the founder and CEO of Bluma Wellness, a Florida-based multistate operator recently purchased by Cresco Labs. Before founding Bluma, Cobb led market-setting strategic investments in the cannabis space as the CEO of publicly traded Sol Global Investments Corp.

Dominique Mendiola

 Colorado Marijuana Enforcement Division Boosts Leadership Dominique Mendiola was appointed senior director of the Marijuana Enforcement Division (MED) in the Colorado Department of Revenue (DOR).

Mendiola joined the MED in 2014 and most recently served as deputy director of policy, licensing and communications, where she managed rulemaking, licensing and communications for the division. She also served as the state’s director of marijuana coordination under Gov. John Hickenlooper from July 2018 until the end of Hickenlooper’s term. Before entering Colorado politics and marijuana policy, Mendiola was an administrator for a family law office in San Antonio, Texas, and was a crisisintervention representative with the San Antonio Police Department. Hired or promoted someone for a senior-level position? Send a news release or general information to Omar Sacirbey at omar.sacirbey@ mjbizdaily.com.

July 2021 | mjbizdaily.com 79

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#2 Turn-Key Retail & Delivery Business For Sale (Santa Ana, CA) Asking Price: $11,900,000.00 (Seller Financing Available) Space: 3,400 SqFt Rent: $20,000/Month 22,000 SqFt of Cultivation is available at an added premium2021 Building could be purchased

#5 Turn-Key Cannabis MicroBusiness Retail, Distribution Type 6 Manufacturing, Extraction Includes Real Estate (SISKIYOU County, CA) Asking Price: $4,000,000.00 Retail Space: 1,200 SqFt Manufacturing Space: 1,100 SqFt Distribution Space: 1,200 SqFt Employees: 14 (Includes Retail, Manufacturing & Distribution) Licenses: Retail & Non-Storefront Retail, Manufacturing Type 6, Distribution

#3 Cannabis Dispensary, Retail/Distribution, Turn Key, Real Estate Can Be Purchased (Vallejo, CA) Asking Price: $8,900,000.00 Lot Size: 19,000 sqft Building Size: 995 sqft Medical & Recreational Sales Allowed 2021 Projections: On pace to do $9million

#6 Turn-Key High Revenue Dispensary & Delivery Business For Sale (West Los Angeles) Asking Price: $11,000,000.00 Space: 3,300 SqFt Rent: $20k/Month Lease: 5 YR w/ (3) 5 YR Employees: 17 Wholesale Inventory: $600k $2M into the Buildout Seller is open to Stock with the right Public Company with a proven track record

WWW.GREENLIFEBUSINESS.COM Green Life Business Group, Inc. CA DRE# 02061374 619-653-0483

SALES@GLBGROUPINC.COM

AdvertiserIndex

Our Advertisers Agrify....................................................................... 24-25

MFG Tray Cos...............................................................34

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MJBizDaily.......................................... Inside Back Cover

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Natoli Engineering........................................................49

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Cannabiz Media.................................Inside Front Cover

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CB Mills.........................................................................32 CenturionPro Solutions..........................................40-41 Dongguan Ledstar Optoelectronic Technology..........29 Dynamic Air Quality Solutions.....................................80 Factory West Studio.....................................................80 Fluid Research.............................................................31 Gavita......................................................................64-65 Greenlife Business Group...........................................81 Grower’s Choice............................................................. 9 GrowSpan.....................................................................73 Guangzhou Nalite Intelligent Lighting Appliance ......33 Hawthorne Gardening..................................................15 The HC Cos...................................................................39 Hemco...........................................................................80 High Tek USA................................................................47

Patterson Fan...............................................................79 PeopleGuru...................................................................35 Precision Extraction Solutions....................................69 PurePressure.......................................................... 16-17 Ross Mixers..................................................................13 Rubber Fab...................................................................38 Seven Leaf Capital.......................................................80 Sevenpoint Interiors.....................................................77 Shenzhen SNC Opto Electronic...................................23 Siva Enterprises.............................. Outside Back Cover Ska Fabricating............................................................78 Surna............................................................................21 TCP Lighting..................................................................37 Temeka Group..............................................................59

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True Liberty Bags.........................................................53

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KannaMill......................................................................36

Viscon Medicinal Crops...............................................80

82 MJBizMagazine | July 2021

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