Kevin Murphy, the CEO of Acreage Holdings, one of the largest private, vertically and horizontally integrated cannabis investment company’s in the USA, discusses their history and expansion across the nation, already operating in 11 states nationwide. The company has future plans to become a publicly traded and owned entity in Canada, due to the new legality of cannabis since the passing of bill C-45 in Ottawa. Kevin outlines the company’s growing operations, extraction product manufacturing and retail profile, as well as how they are looking to continuously grow its already established footprint to create a leading national and global brand.
James West: We have a guest now joining us Kevin Murphy is the CEO of Acreage Holdings one of the US largest private horizontally and vertically integrated cannabis companies. Kevin, thanks for joining us today.
Kevin Murphy: Pleasure to be with you and thanks for having me.
James West: Yeah, Kevin, so we’ve been following your company with interest. You know up in Canada here we have the unicorns and the double unicorns of cannabis yet we’ve been watching Acreage come together and it’s looking like by all accounts it could be an instant unicorn if and when it decides to go public. Is that within your sort of plans?
Kevin Murphy: Well you’re very kind and I appreciate the well wishes and frankly the enthusiasm. We think we’ve done a pretty good job here and quite candidly we do to aspire to be one of the most prominent players in the United States as it relates to cannabis. We started this journey very early on. We were probably one of the first to be involved with cannabis, legal cannabis on the east coast and I think that the good news is we were early and we were right.
James West: Right. So, you’ve got House Speaker John Boehner on your board of directors and I’m curious as to a) how did you accomplish that? and is that representative of the US sort of national impotence towards a federal prohibition of cannabis?
Kevin Murphy: Well Speaker Boehner is very, very important to us. He’s very very important I believe to the overall industry and the reason for that is multifaceted. Speaker Boehner has historically been a nay-sayer on the legalization of cannabis but given the fact that he was the speaker of the house here in the United States, representing the people of this country and ultimately and quite honestly, I was not the one that convinced Speaker Boehner that this was a good thing.
I think the people of this country convinced Speaker Boehner that this is a good thing. Cannabis on the medical front; 94% of this country believes cannabis should be available and on the recreational front 64% of this country believes it should be available and so in turn the speaker is mirroring what the people have stated and that is, this should be available to Americans who want it.
Steve Misener: Steve Misener here by the way. Pleasure to meet you.
Kevin Murphy: Pleasure to meet you.
Steve Misener: It is very compelling to have the speaker involved with your company because he was a high-profile hesitant player to endorse it so I mean that’s just an incredible coop for your company and it draws so much positive attention to it. We see that you’re in 11 states I mean that’s just a huge footprint and can you elaborate on some of the challenges and then maybe some of your skill-set to get licenses in all those States?
Kevin Murphy: I can Steven, thank you. Just as an aside; we think of time here as counting days and weeks not months and years. So, we are currently now close to 15 states and so we’ve actually grown since that fact was last published but it has been a great journey for us. We started in the state of Maine, learned from that experience back in 2011, 2012 and it was really from that experience we were inspired with a lot of the miracles that we had experience there to continue with the expansion of that footprint. First in New England and then ultimately New England and beyond. We focused historically on the East Coast but now have moved West through Illinois, Oregon, California.
We believe that bigger in some respects is better in this space because we can go on a fair amount of synergy amongst all of the different operations that we have. Again, it is a state-by-state business, but we can centralize a lot of the operations, we can centralize a lot of the accounting and legal to where we really get an expansion of margins. So, we feel very fortunate and blessed to be where we are today and again humbly we started early before most and so that is probably what’s led to a large part of our geographic diversity and ultimate size.
Steve Misener: Interesting, as well your success in 15 states but also that you came out from the East to the West because virtually everyone that we follow mostly come from the West where it might be deemed to be easier it may have been deemed to be more trailblazing to get going on the West Coast maybe more friendly legislatively and we had we discussed with an expert last week about how companies that can get licensed in the tougher States actually prove maybe a stronger skill set in achieving those licenses in the more difficult Eastern States.
James West: Kevin, sorry can I ask you are you planning to go public in Canada?
Kevin Murphy: We are. We believe accessing the public markets gives us more optionality. For us taking a company public really doesn’t equate to a monetization of our business. It really helps us create more options in which to expand our operations so and yes Canada has been very welcoming. It’s to some degree a little bit sad given the fact that we sit here in the United States with our schedule 1 drug cannabis.
The Israelis are leading the research. the English are receiving indications from the FDA that they’ll get approval for a cannabis derived drug and frankly the Canadians are leading the capital markets. We couldn’t be more pleased and proud to list in Canada because frankly we go we’re welcomed. Today in the United States we’re welcomed in 30 States but there are 20 states that we are not welcome and we won’t participate in those states until we are welcomed. So, again grateful to the Canadians to invite us North.
James West: Yeah, well we’re just friendly people that way.
James West: So, tell us a bit about your actual; your corporate profile now, okay you’re in all these states, you have growing operations in some places, growing and retail in places, you’ve got extraction product manufacturing. What exactly does your sort of profile look like?
Kevin Murphy: We’re predominately vertically integrated in every state. So, in every state we’re growing, we’re processing and we’re dispensing cannabis. There are a select few where we are not vertically integrated such as Connecticut Maryland and currently Ohio. We do plan to be and aspire to be vertically integrated in every state that we operate and the purpose for that is simply we’d like to control the entire experience from seed to dispensary and so that’s from our vantage point the ultimate. We had to start somewhere in these various states and developing some bit of a footprint and building from there will be the ultimate goal where we are currently not vertically integrated.
Kevin Murphy: Well kudos to Adam, I know him well and a very, very good guy and certainly a very strong competitor. We have admiration for the fact that he really been a media darling and done a very good job at telling his story. We in turn have done quite the opposite. We had initially started in Maine and then moved to Connecticut in New Hampshire and Massachusetts and now 15 states. We have done it quietly.
Our goal was to really do it in stealth mode to create one of the largest footprints we could and then ultimately, as we had seen the social buying for cannabis over that period of time that we built this organization. Now that we’ve gone to such a really incredible number of; this Country believes cannabis should be available, 94 for medical and 64 for adult use.
It’s now a time for us to take the footprint that we have and really have essentially 15 flags in 15 states under one national brand. So, it’s taken us about eight years to become an overnight success but we in turn believe that that was really the best way for us to quietly and frankly most efficiently build organization. So, we actually did quite the opposite of MedMen.
Steve Misener: Kevin, it’s interesting that you use the word stealth when you’re telling about how you build this company quietly in the private market sense for 8 years and then now you’ll be coming out with such a massive national footprint, I think that’ll appeal to investors in a great way. Can you share with us because I am not an expert in some of the other players in the US, can you share with us anyone else who has that kind of 15 state footprint that you’re aware of?
Kevin Murphy: I don’t believe there is anyone that is quite 15 states. I do believe that there are others that are aspiring to be as large as we are. I do think that some of the multi-state players such as GTI, Green Thumb Industries has done a pretty decent job. I also believe that Palliatech has done a pretty decent job. But again I think that given the sheer size of the market place here in the United States, we find ourselves in the unique position that we’re essentially rooting for everyone and as Speaker Boehner joined us, one of my competitors said to me, you know Murph, it’s really the first time that I can remember in this space that someone has done something so incredible for their own organization but has been so impactful and so positive for everyone else in the business and for that I, thank you and commend you for the work you’ve done.
That’s a proud moment for us because again we are so blessed and it us it’s not a zero-sum game. We rejoice in other people’s success and happiness and we’re really rooting for everyone to do well because we believe that beyond economics; yes we are going to make a lot of money in this business. We intend to for our shareholders and for ourselves but as I’ve often stated the Lord loves a cheerful giver and you better have a lot of money to give if you want to be cheerful and we intend to make a lot of money but we intend to put a lot of money back into research and really helping people help themselves, such as veterans of this country and people that don’t have and can’t afford the medicine. We want to make it available to them as well
Steve Misener: Can you describe maybe the profile a little bit about how you’ve been able to get funding for 8 years to such a degree in the private market today. I mean I find that very compelling.
Kevin Murphy: Well someone once said to me if you want to be a millionaire start with 10. So I had some very good fortune in my life from a business standpoint. I had spent a good portion of my career in finance having started and grown my own finance company which ultimately was able to monetize on and had money to start in this business.
When we started in 2011 or 12 virtually no one wanted to give us their money and so we started with our own. Over the years we have built not only a reputation but also a track record in performing well and that is when others had then got enough courage to join us in this venture. Money raising has got a lot easier for us over the years because I think we’ve done what I believe to be the right thing at the right time, every turn. We put our investors before ourselves.
Every round of financing that we’ve ever done we’ve subordinated our own shares to those investors because it’s our goal; yes, to enrich ourselves but I often say you know I don’t like losing my own money but I’ve got a very, very hard time losing somebody else’s money and so that’s the way we’ve done it and that’s the message we’ve conveyed to our investors and that is why on this last round of financing that we’ve just done, we were about 5 to 6 times oversubscribed for it.
Again, and don’t misconstrue this as a boastful statement, I’m just trying to state facts; we try to do what we say we’re going to do and we do it with frankly in a compassionate and caring way.
James West: Sure, do you have a sense at this point on a timeline until you seek a public listing in Canada?
Kevin Murphy: We would like to have this company publicly listed this fall. I think right now we’re getting into the diligence of the summer which does afford us the opportunity to work very hard on all the things we do need to do to ready ourselves to be a public company. Our listing is a little bit more complex than others given the fact that MedMen today is in three states. GTI is in a handful of states. We being in 15 states have a much larger hill to climb given that we have a lot more things to account for. So, I believe the end result is going to payoff but the timing to run that race is to some degree elongated because of our sheer size.
James West: Well you’ve done an incredible job to date. We certainly wish you the best of luck and we’ll be happy to follow your story as you come closer to going public. Thank you so much for your time today Kevin.
Kevin Murphy: Well you’re a gentleman and thank you both for having me. I’m delighted to share our story with you and grateful to be a part of your story.
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