Chicago Council green lights Jan. 1, the cannabis loyalty app, Howard Wolinsky Q&A and more...
In this Issue
Chicago Council pot spat signals new normal
The Chicago roots of CannaCard, “the Starbucks app for Cannabis”
Howard Wolinsky and Brad Spirrison talk web, weed and whatever comes next
Thanks for sharing Grown In: Illinois
Illinois Cannabis Company Tracker: Cresco Labs, Green Thumb Industries, PharmaCann, Revolution Global
Study: Peter Thiel's Mushroom Company Shines
Roll Call: Wes Moore, Kelly Cassidy, Brett Novey, Coco Meers, Mindy Segal
Chicago Council pot spat signals new normal
It what was likely the last barrier to buying bud in the Chicago city limits without a medical card beginning January 1, the Chicago City Council voted earlier this afternoon 29-19 to defeat a proposal by the Black Caucus that would have delayed recreational sales in Chicago until July 1.
Business owners and public servants invested in immediate cannabis commercialization throughout the state - as well as impatient Chicago residents dreading a January 1 drive to Evanston or Oak Park - can now exhale.
The winners in this battle - which was the “lead story” for Chicago media (TV, newspapers, Twitter, etc.) for the preceding 24 hours before the vote - are Mayor Lori Lightfoot, Governor J.B. Pritzker and cannabis companies like Cresco Labs, which are scheduled to open shop in the city in two weeks.
Losers include Chicago 28th Ward Alderman Jason Ervin, other members of the Black Caucus, and, according to Politico reporting perhaps commercial dispensary owners including Green Thumb Industries who won’t be able to sell cannabis in the city until later 2020 and were hoping to block a head start from the competition.
The comprehensively white ownership among Chicago-based dispensaries remains a serious issue that will now be addressed at a later date. Perhaps sooner rather than later as longtime political reporters observed that today’s vote brought back memories of the Council Wars of the 1980s. Cannabis will continue to be an element of debate and divisiveness between a first-year mayor and a council she is pledging to reform.
Expect many more legislative and logistical speed bumps as Illinois and Chicago prepare for January 1 and the world beyond.
The Chicago roots of CannaCard, “the Starbucks app for Cannabis”
Among the many headaches faced by dispensary owners in late 2019 is managing cash in what remains a federally illegal enterprise.
Very few banks, credit card companies or other financial services businesses are willing to risk their charters transacting with cannabis retailers.
Would you believe that there’s an app for that?
Actually, there are many apps and technologies like CannaCard - developed by Chicago-based mobile developer and consultancy ThinApp - that were created to mitigate existing financial regulations and restrictions for the cannabis trade.
Here is what seems like a movie trailer of the CannaCard app the company helped to develop. Think of it as prepaid Starbucks card/loyalty app for weed.
Beyond figuring out compliance work-arounds, a cottage industry of ancillary marketing, technology and financial services companies are targeting owners of dispensary licenses as well as new and established companies in the space with hopes of growing alongside one another.
“Cannabis is way more complicated than anything we’ve ever seen,” said Ken Davis, founder and CEO of ThinApp.
Davis, who grew up in the Cabrini Green housing projects and graduated from The Latin School of Chicago in 1994, a few years ago saw business opportunity helping cannabis companies make sense of mobile markets. His 11-person firm, a partner of the Square merchant services application, recently spun off a cannabis-specific practice.
Davis observes that among the biggest issues faced by current and prospective clients in the cannabis industry is relying on old technology. While this is convenient for an app developer and technical consultant to say, it also may be true. In Illinois and other states, individuals and organizations fortunate enough to obtain dispensary and cultivation licenses may come from industries not as reliant on technology.
“Nobody has addressed the core technology for this industry", he said. “You lift up the hood, 90 percent of the technology is not secure, not industry standard. Sometimes we would have to find a 40-year old or 50-year-old that knows an old (programming) language (to update technology).”
While Davis and his firm are no longer developing CannaCard technology (he says that company is focused on patent and IP protection and raised millions from the app prototype ThinApp built), he has signed a handful of new clients in Illinois and elsewhere and like many is getting ready for a 2020 green rush.
Howard Wolinsky and Brad Spirrison talk web, weed and whatever comes next
If there is a “dean” of Chicago-based medical, technology and startup business reporting in Chicago, it is Howard Wolinsky.
During the dot-comedy twenty years ago, Howard profiled hundreds of companies and individuals zealously trying to change the world while also embracing that “first day pop” of an initial public offering. He’s also written extensively on the best and worst practices of the American Medical Association, and more recently on genetics, modern health and wellness.
Brad Spirrison of Grown In: Illinois wrote for the Chicago Sun-Times at the same time as Howard, chronicling the rise, fall and rebirth of Chicago’s digital and technology economies. As commercial cannabis industries normalize and attract more talent and venture capital to the sector, the two can’t help but to compare what may be our state’s next great industry to the formative years of Chicago’s tech sector.
Here is their conversation.
Brad: It’s been more than a decade since we asked in the Huffington Post whether or not tech was dead in Chicago. While we have a lot of work to do and need to think of ourselves differently than Silicon Valley, it’s hard to imagine a Chicago economy not fueled by tech in the years and decades to come.
Switching over to weed, how can today’s cannabis captains of industry learn from the mistakes of entrepreneurs and companies that swung and missed trying to build great Internet companies?
Howard: Brad, you ignorant slut. What are you smoking, anyway?
In the end, was the experiment on the so-called "Silicon Prairie" a dud? Didn't you learn anything the last time? What lessons are there for the Stinkweed Prairie?
Why don't you get a regular job? Oh, yeah. There aren't any.
Brad: Let's agree to disagree on the legacy of the Silicon Prairie - or at least treat it as a work still in progress.
There are lessons a-many to be learned about how Chicago entrepreneurs and businesses react to an influx of capital, opportunists, propaganda and skepticism associated with the advent of a new shiny or in this case a bit stinky industry.
For starters, the pioneers are often those who have the arrows in their backs. Twenty years ago, for instance, a company called divine interVentures was the toast of town, with everyone from the Wrigley family to Microsoft to Michael Jordan trying to buy a piece of the future. Of that firm's "Zaibatsu" of 52 mostly business-to-business companies, I believe nearly 50 were toast by 2002. It took a few years for Chicago to find its way into the sector. Eventually, companies like Feedburner, 37Signals, Grubhub and Cleversafe began to define and dominate valuable digital categories.
For new industries, it seems, Chicago is better figuring out how to process, merchandise and reconfigure raw product that that we are inventing it. With cannabis, we do have what seems like a legit infrastructure of plant-touching growers, processors and merchandisers - including five or six of the largest in the United States (Cresco Labs, Green Thumb Industries, Grassroots, Revolution Global, PharmaCann and Verano.) That base alone could position Chicago well, even if cultivation advantages emerge in places like California when/if the plant becomes federally legal.
Also exciting are companies like Fyllo, based in the West Loop, who are raising capital ($18 million, in its case) to develop software to solve compliance-based advertising and marketing problems many brands and distributors have. So, there are a lot of opportunities to be passed around, so to speak. This time, we should take it slow and not ingest to much to quickly.
Howard: Brad maybe you have drunk the Kool-aid after all? I, like you, enjoyed the whimsical days of yore of Flip and the Zaibatsu.
From toast of the town to toast. Many of those guys making the transition to cannabis? But why will things succeed here?
From what I hear, the cannabis industry hasn't exactly been the windfall for state governments and municipalitiesout west. Aren't there all kinds of issues accessing the banking system? Can smart Chicago money crack that one, like they did in Vegas back in the day? Mari-fin would seem to be in what you kids call Chicago's wheelhouse. What do you think mari-man?
Brad: I think we are in circa 1997 when comparing the rise of the world wide web to today's nascent cannabis economy. While there already has been a wave of first movers to go public or sell for lofty 9-figure valuations - only to share prices fall 70+ percent in recent months - I believe we are just scratching the surface.
There is hundreds of billions of capital on the sidelines waiting to enter a more normalized federal market. The banks and credit unions are the primary lobbying industries behind federal legalization, with two separate bills in congress getting support across party lines. It already is a multibillion dollar industry that exists in the black market.
Beyond the low-hanging fruit of migrating existing customers to more legit channels, there are no consumers who will feel permission to imbibe knowing they no longer are evading the law. This includes different form factors beyond smoking the plant - including edibles, vapes, cooking oils and even epson salt. Perhaps the medicinal and intoxicating properties of the plant will make opioid use less prevalent in the years and decades ahead.
Chicago has the business and educational infrastructure to be a leader in this market. What will be very interest to follow, however, is how we adjust from a societal perspective. Are we ready for a world where more people are high at more times throughout the day?
Howard: (Paraphrasing - let's see if anyone responds to this and then we can do more)
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Illinois Cannabis Company Tracker: Cresco Labs, Green Thumb Industries, PharmaCann, Revolution Global
Each week, Grown In: Illinois shares a thing or two about the largest cannabis companies in the country that just so happened to be based in The Land of Lincoln.
Cresco Labs
New York-based real estate investment trust (REIT) GreenAcreage Real Estate last week acquired the largest cannabis cultivation facility in Illinois from Cresco Labs for $50 million. According to real estate trade publication the Commercial Observer, this is believed to be the largest transaction to date for a cannabis property in the United States.
Construction for indoor and outdoor growing areas at the 220,000 square foot Lincoln, IL.-based cultivation center is expected to be completed in February. In a battered market for publicly traded cannabis companies, Cresco presumably use proceeds from the sale/leaseback to fortify commercialization in its home state, which as we know goes adult-use legal in a couple weeks.
GreenAcreage recently raised $141 million for the REIT, and is a “strategic partner” of Acreage Holdings, multi-state grower, processor and merchandiser of cannabis that was founded in 2011 to commercialize a Maine cannabis license.
Green Thumb Industries
Widely read business, politics and society journalist Shia Kapos earlier today pieced together how Chicago-based Green Thumb Industries may through lobbying efforts have had a hand in impacting the 10-9 vote by The City Council Committee on Contract Oversight and Equity on Dec. 17 that could potentially delay the sale of Cannabis in Chicago until July 1.
Kapos reported that GTI and Culver City., California-based MedMen Enterprises “have a heavy lobbyist contingent in City Hall this week” as they potentially could benefit commercially from the delay. Specifically, those companies can’t sell in Chicago until later in 2020, giving companies like Cresco Labs, Columbia Care and 4Front head starts in the market.
MedMen earlier this year attempted to acquire Oak Park-based PharmaCann for $682 million in a deal that squashed in October.
PharmaCann
Towns like Ottawa, Illinois stand to make an additional $600,000 in tax revenue as a result of adult-use legalization and commercialization. PharmaCann’s Director of Regulatory and Government Affairs Jeremy Unruh, shares more of his predictions with the LaSalle News Tribune.
Revolution Global
Listen in and learn about Revolution, currently the largest producer of Medical Cannabis in Illinois, and how the company is gearing up it Delevan, Illinois-based cultivation facility for the New Year rush. This radio segment was produced by Peoria Public Radio.
Study: Peter Thiel's Mushroom Company Shines
While many of us in Illinois and other states get used to the normalization of commercial cannabis, Silicon Valley VC lion and libertarian Peter Thiel has his mind on mushrooms.
The co-founder of PayPal, early investor in Facebook, and Gawker combatant through Thiel Capital is an investor in London-based Compass Pathways, which is currently hosting some sort of user focus group involving the consumption of psilocybin as part of a clinical trial.
Last week Compass released early results and user feedback and reported that their treatment was “well-tolerated in healthy volunteers” and subjects said they experienced “positive mood alteration”.
Although efforts to create businesses in the entrepreneurial wonderland that is the psilocybin sector remain nascent, Business Insider earlier this year predicted a psychedelic gold rush. This syncs with what New York Times Best Selling Author Michael Pollan shared with a Chicago Humanities Festival audience in the spring while promoting his most recent book How to Change Your Mind.
Pollan noted that a medical tourism trade seems likely as wellness spas eventually get the right to prescribe the substance - already treated for various mental illnesses - which could emerge as a key antidote for an upcoming weekend escape.
Roll Call: Wes Moore, Kelly Cassidy, Brett Novey, Coco Meers, Mindy Segal
Wes Moore – Director at Green Thumb Industries (GTI) and CEO of Robin Hood
Wes Moore’s day job is in New York, where as CEO of the Robin Hood Foundation he runs a metrics-based charity focused on poverty prevention. As a director of GTI, he formally serves as Social Impact Subject Matter Expert for the Chicago-based cannabis cultivator and retailer. A multimedia impresario who writes bestselling books and partners with the likes of PBS and Oprah on television programs, Moore previously founded job-placement and education platform BridgeEDU.
Kelly Cassidy – Illinois State Representative, 14th District and architect of the Illinois Cannabis Regulation and Tax Act
Kelly Cassidy’s political rationale for championing commercial cannabis in Illinois is clearly explained here, and is based on health science, equity and economic opportunity. This is “first and foremost and issue on social justice,” she states. Cassidy tag-teamed with Illinois State Senator, 7th District, Heather Steans to bring legislation to the finish line. Her spouse, Candace Gingrich, joined Elmhurst-based Revolution Global in July 2019 as a busines development executive.
Brett Novey – CEO at PharmaCann
In early 2019, Brett Novey got promoted from finance director of PharmaCann, to the CEO of one of the largest Illinois-based producers and retailers of commercial cannabis. The company was set to sell to L.A-based multi-state operator MedMen for $682 million, but that deal was killed in October. PharmaCann, founded in 2014, retails through the Verilife brand and has six dispensary licenses in Illinois. The Oak Park-based company has raised $42 million in venture capital and is estimated to generate $20 million in annual revenue.
Coco Meers – CEO at Equilbria
Serial entrepreneur and angel investor Coco Meers sold and integrated her beauty booking application, Pretty Quick, to Groupon before getting into the CBD business in 2018. Her company Equilibria cultivates the plant on an 1100 acre farm in Colorado before consulting customers on what treatments and dosages might work best for them. The “for women by women company” based in West Town then makes monthly shipments based on the recommended regiments.
Mindy Segal – Pastry Chef and "Creative Force" behind Mindy's Artisinal Edibles
In 2015, Mindy Segal of HotChocolate and James Beard-award winning fame partnered with Cresco Labs to get into the edibles business with Mindy’s Artisanal Edibles. From Peanut Brittle to Marshmallow Graham to Snickerdoodles, the “Mistress of Deliciousness” prepares 4-packs of 25 miligram THC goodies for eligible customers. According to Crain’s, Segal’s line of more than 50 products was on pace to generate more than $5 million in 2018. The Charlie Trotter and MK veteran raised $1 million from Cresco and others to launch the business.