Grown In: Illinois - The Cannabis Industry Newsletter, Issue 1
In this Issue
Welcome to Grown In: Illinois
You are invited here by Brad Spirrison
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Cresco Labs and PharmaCann execs tout “normalization” of new industry
MarTech + Marijuana = $18M in VC funding for Fyllo
On a Mission from Ganga God
Hyde Park Angels leads $4.5 million investment in Leaf Trade
The Straight Dope from IL Congressional Candidate Anthony Clark
Illinois Cannabis Company Tracker
National News of Note
Roll Call: Wendy Berger, Jeffrey Howard, Edie Moore, Mark De Souza, Ally Marotti
Welcome to Grown In: Illinois
Who we are
Grown In: Illinois is a community of editors, entrepreneurs, parents and professionals who are active in industries and organizations that should benefit from the legalization of recreational cannabis in Illinois.
What to expect
Grown In Illinois will provide carefully candid reporting, curation and commentary on businesses, nonprofits, individuals and political organizations directly or indirectly involved in Illinois-based cannabis industries. This will be transmitted via free weekly email newsletters, social media and on our blog (coming soon!). As we grow alongside Illinois-based cannabis communities, we will add more ways to participate, connect and develop professionally.
We want to hear from you!
We only know as much as what we can curate and comprehend from our communities. Please share feedback, criticism, news tips and ideas with us at info@grownin.com and also participate in our social channels at LinkedIn and Twitter
You are invited here by Brad Spirrison
Thank you for checking out the inaugural edition of Grown In: Illinois. I welcome and encourage feedback, criticism, news tips and partnership ideas. If you have friends/colleagues/etc. who might be interested in this free weekly newsletter, please forward this along. If this newsletter is not your cup of tea, I won't take it personally if you unsubscribe. I appreciate you being here and look forward to sharing more about this community. -Brad Spirrison
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Cresco Labs and PharmaCann execs tout “normalization” of new industry
“This is no longer a pioneering industry,” Cresco Labs president Joe Caltabian explained to a packed house of close to 300 (mostly aspiring) cannabis entrepreneurs and professionals at Chicago’s 1871 incubator on December 3. “It’s a growth industry.”
And by growing, Caltabian didn’t just mean the plant. The term “ancillary industries” came up more than a few times during a panel conversation, that also included PharmaCann regulation and public affairs director Jeremy Unruh and Illinois state rep (58th District) Bob Morgan.
While Chicago-based Cresco and Oak Park-based PharmaCann along with Chicago-based Green Thumb Industries, Elmhurst-based Revolution Global (formerly Revolution Enterprises) and Deerfield-based Grassroots Cannabis - are among the largest growers, processors and merchandisers of medical and adult-use marijuana in the country, the economic impact of the normalization of cannabis consumption in Illinois will most be felt within industries that never touch the plant.
“We have to find professional services firms who are comfortable in our space,” Caltabian said, adding that it’s hard to find a banker willing to risk its charter to engage in activity currently classified as federally illegal or a real estate agent who understands the nuances and heavy compliance requirements associated with selling grass within traditional retail environments. “This is an art that big firms can’t do right now.”
As businesses and residents prepare for adult-use cannabis consumption to become legal in Illinois on January 1, the panel advised entrepreneurs to look past inevitable hiccups.
“You can predict every story that’s going to be written in the next six months,” said Morgan, drawing upon what happened in the previous 10 states to make this transition. “The long lines. The grandmother who uses cannabis for the first time since Woodstock. The first person to get popped with a DUI.”
Fear not. Just around the bend, they said, will be increased employment opportunities, community-based business incubation and many stories to tell for Chicago’s established branding and advertising communities. In fact, demonstrating a bit of our patented provincialism, panelists boasted that Illinois can and will be a nationwide leader in what is among the country’s fastest growing industries.
“Those of us in Illinois have distinguished ourselves from those who came from western states,” said Unruh. “You call them the pioneer states, I call them the legacy states.”
The Chicago Cannabis Entrepreneurial Roundtable was the first of a series of events convened by Cresco Labs. The company’s chief communications officer Jason Erkes moderated the panel.
MarTech + Marijuana = $18M in VC funding for Fyllo
One of Chicago’s fastest growing tech companies raised $18 million in venture capital to automate communication within the cannabis industry.
Founded only seven months ago, West Loop-based Fyllo develops and licenses software to cannabis advertisers hoping to find shortcuts through the myriad of municipal, state and federal regulations associated with promoting pot consumption.
Through its patent-pending CannaBrain platform, Fyllo is manually and algorithmically developing a database of compliance requirements down to the municipality. Issues facing cannabis advertisers range from establishing compliant interstate communication channels to modifying creative elements that don’t adhere to more rigid or complicated standards.
Fyllo co-founder and CEO Chad Bronstein previously was chief revenue officer at digital advertising agency Amobee. From that vantage point, he recognized a market inefficiency in a quasi-legal yet highly regulated sector, and decided to go after it.
“I talked to a lot of brands,” Bronstein explained to Grown In: Illinois, “and I asked them all 'do you get this now and do you think this will be a need for you later.'”
The relationship between cannabis brands and consumers is still in the embroynic stage. As Fyllo develops its platform, Bronstein believes the company will be able to provide user persona insights for a product that for many is just getting passed the taboo stage. He shared a hypothetical use case with a few hundred aspiring cannabis entrepreneurs and professionals during a December 3 presentation at 1871.
“How do you know if a soccer mom is already eating Mindy's Edibles at night,” he asked rhetorically while showing slides illustrating how CannaBrain works. "How do I identify an in-market edible user, and in-market CBD user, and an in-market THC user?”
Not bad questions to consider for a multibillion dollar consumer product industry that is just getting started. While Fyllo does not actually “touch the plant” like publicly traded Chicago-based companies Cresco Labs or Green Thumb Industries, the startup's inventive business model and early funding success showcase how the legalization of recreational cannabis creates economic opportunities in ancillary industries seeking to expand within a new vertical - in this case advertising. Throughout Chicago and nationwide, we are seeing similar phenomena in banking, security, lighting and staffing among a range of industries.
Much of Fyllo's venture capital comes from New York-based JW Asset Management, an active investor in cannabis companies, and Toronto-based hedge fund K2 & Associates. The primary tech team is based in Tel Aviv, and Fyllo maintains offices in New York and Los Angeles. Fyllo was one of 15 companies showcased by Chicago Mayor Lori Lightfoot last month during Chicago Tech Day, as it is expected to create 120 jobs through 2020.
Bronstein, originally from Cleveland, said there are obvious benefits to headquartering Fyllo in Chicago, where cannabis will be legal come January 1. He also cited the “midwest culture” and recent success of companies like Cameo and SpotHero as factors in basing the company in Chicago.
Another-founder, Aristotle Loumis, is a serial entrepreneur who sold his greek handmade eyewear retailer to Marcus Lemonis. The company’s board of directors includes cannabis entrepreneur and investor Lorne Gertner, Twitter’s Chicago-based Head of Global Brands Katie Ford and Mitch Kahn, founder and CEO of Deerfield-based Grassroots Cannabis, a multi-state grower, processor and retailer of cannabis that was acquired in July 2019 for $875 million in cash and stock.
Fyllo of course is hiring. Learn more here.
On a Mission from Ganga God
“If my brother was a pothead, he would be alive today.”
Actor and cannabis entrepreneur Jim Belushi recently shared these feelings about his brother John with a full house of Chicago area innovators at the Harris Theater for Music and Dance.
Sure, Belushi was also there to plug the existence of his new Oregon-based pot company Belushi's Farm, and perhaps some brands with taglines like “The Smell of SNL” that could be on a dispensary shelf near you sometime after the turn of the year.
But being an opportunistic businessperson with syndicated sitcoms and dozens of movies on his resume shouldn’t disqualify him from seeing the light. Quickly into Belushi’s conversation with business partner and publishing executive Christie Hefner, one could easily surmise that not only was he an owner of Belushi's Farm, but also a highly regular customer.
“I developed a relationship with the plant that helps me personally,” he explained, adding on more than one occassion that he likes to micro-dose to treat performance-related PTSD and to live his life more fully.
“It enhances the sound of music, makes food taste better and sparks creativity,” he added as laughter (some with him, some at him) filled the room. Further, he explained that as a bouncer in Chicago several decades ago he “never broke up a fight between two potheads”
The inventors, artists, executives and government types who attended the Chicago Innovation Awards were largely in “wait and see mode” when Grown In Illinois asked about how adult-use legalization would impact the local economy and cultural scene. Some agreed that there are more than a few parallels between today’s green rush and the dot-com boom that infiltrated our lives and businesses twenty years ago. Others were boasting about plans to “get into the dispensary business”, paying little attention to the obstacles involved in actually obtaining a state license to sell the plant.
The question remains: Will commercial cannabis be a new economic pillar for Illinois, modernizing and infusing talent and resources into everything from cultivating crops to merchandising brands to leveraging blockchain to get past federal commerce restrictions? Or is this all just a pipe dream?
As David Mamet wrote and Belushi delivered in About Last Night, “at this point, we don’t know."
Hyde Park Angels leads $4.5 million investment in Leaf Trade
Chicago-based Leaf Trade is the latest Illinois cannabis company to announce a venture capital raise as it secured $4.5 million on Nov. 20.
The company’s technology platform was built to facilitate wholesale transactions between licensed cannabis growers and dispensaries. Leaf Trade, explains founder and CEO James Yi in its published origin story, will eliminate things like dispensary owners taking pictures of desired products that they want to sell, or even writing things down on napkins!
Hyde Park Angels member Jeff Kleban sits on the company’s board of directors. Additional investors include Duke Software Investments and Chingona Ventures (based in Chicago). Proceeds from the round will be used for additional state expansion and hiring software and data engineers.
The Straight Dope from IL Congressional Candidate Anthony Clark
Clinton didn’t inhale. Obama inhaled because “that was the point.” Now a new class of politicos are blowing smoke into cameras, burnishing their bonafides as cannabis consumers and social equity advocates with political ads where joints are freely imbibed among constituents.
Anthony Clark, who is running to unseat longtime congressman Danny Davis in the Illinois 7th District, last week released a video where he shared how marijuana consumption “saved” him from trauma experienced in the Air Force and during a recent shooting.
“Lying to individuals, I think, plays a direct role in enabling status quo, in enabling the oppressors,” he said on the video.
Clark also recently burned one to celebrate his 10,000th Twitter follower, singing along with Ice Cube.
Illinois Cannabis Company Tracker
Last week Chicago-based Cresco Labs announced that it no longer plans to acquire Florida-based medical marijuana provider VidaCann. Consistent with industry-wide retrenchment as share prices for many cannabis-related companies have pummeled in recent months, Cresco expects to save $120 million overall by red lighting the deal.
“We recognize that responsibly allocating our shareholders' capital is fundamental to long-term success, Cresco CEO Charlie Batchtell said in a press release.
Cresco last week also reported a third quarter net loss of $8.6 million missing expectations.
CRLBF Ticker – Careers at Cresco Labs
Ben Kovler, co-founder and CEO of Chicago-based Green Thumb Industries, told analysts last week that he believes the company is on pace to generate more than $200 million in revenue this year.
Among the 35-to-40 GTI locations that could be open nationwide by year-end are two new dispensaries in Joliet. Employees at the company’s Rock Island location announced that it is seeking representation by Teamsters Local 371.
GTBIF Ticker – Careers at Green Thumb Industries
Deerfield-based Grassroots Cannabis is opening two new medical dispensaries in North Dakota, under its Herbology brand.
Closer to home, founder and CEO Mitch Kahn explained to Bisnow Chicago how his company is navigating through the real estate rush as dispensaries scramble to find locations for new adult-use dispensaries that will be legal in a few weeks.
“There are some people doing very aggressive things,” he said. “We threaded the needle between an aggressive and conservative approach; I’ll leave it at that without getting into specifics.”
Careers at Grassroots Cannabis
The Oak Park-based company played a recurring role in analyst coverage of the troubles being faced now by Toronto-based MedMen. PharmaCann was to be acquired by MedMed in an all-stock deal valued at $682 million in October.
Up until recently known as Revolution Enterprises, the Elmhurst-based multistate grower, processor and retailer of commercial cannabis last week gained approval to sell recreational cannabis in Mount Prospect under its New Age Care brand.
National News of Note
Keep an eye on the MORE Act
While national politics discourse is dominated by impeachment news, the MORE Act (Marijuana Opportunity Reinvestment and Expungement) is somewhat quietly building momentum. In late November a bipartisan group of house members voted 24 to 10 in its favor. The MORE ACT and similar legislation like the SAFE ACT (focused on banking) is generating support across party lines and ideological spectra. While nobody is predicting an imminent federal green light for the cannabis industry, regulatory norms and predictability would transform what is already one of the nation’s fastest growing industries.
On weed and religion
The New York Times in late November devoted the still coveted cover of its SundayStyles section to a story around the role of rights of cannabis in the church. There are many ways to tap into a higher power, it seems.
Roll Call: Wendy Berger, Jeffrey Howard, Edie Moore, Mark De Souza, Ally Marotti
A few words about five pioneers and personalities impacting Illinois-based cannabis industries.
Wendy Berger –Director, Green Thumb Industries (GTI) and co-founder of Illinois Women in Cannabis
Before joining the board of directors of now publicly traded Green Thumb Industries (GTI) in 2015, Wendy Berger co-founded Neoglyphics, a pioneering web development firm that sold for $65 million during the dot-com boom. She is a principal at WBS Equities, a real estate investment and management firm focused on the food business. In 2014, Berger helped to start Illinois Women in Cannabis (IWC), which offers networking and professional opportunities for women working in an industry “too new to have a glass ceiling”. Headquartered in River North, GTI is among a small handful Illinois-based companies that cultivates, processes and merchandises cannabis-based products.
Jeffrey Howard – Managing Partner, Salveo Capital LLC
A former managing director at Merrill Lynch and The Royal Bank of Scotland, Howard in 2016 became managing partner of Salveo Capital, a Northbrook-based venture capital firm that focuses its investments exclusively on cannabis-related industries. While Salveo primarily targets software and services companies ancillary to the actual production, processing and sale of cannabis, it is one of the few institutional venture investors that will make deals in companies that “touch the plant”.
Edie Moore – Founding Board Member and Executive Director, Chicago NORML
Edie Moore founded Chicago NORML in 2017 with a specific mission to motivate communities of color to destigmatize and accept the cannabis plant as a vehicle for health & wellness as well as political and economic empowerment. The national organization started in 1970 with the wider recognition of educating the public on alternatives to punitive-oriented approaches to marijuana policy. Chicago NORML also provides resources to individuals with drug convictions to bid to become equity stakeholders in cannabis-based businesses. The cannabis industry was really built on the backs of people from marginalized communities,” she told MarketWatch. “To turn around and have [other] people making millions of dollars off of it is just not equitable.”
Mark De Souza – CEO at Revolution Global and Board Director at The Marijuana Policy Project
Longtime trader and Futures’ industry advocate Mark De Souza became CEO of Revolution Enterprises (now Revolution Global) in 2016. Revolution has more than 150,000 feet of plant production space in downstate Delavan - as well as recognized consumer brands like Gorilla Punch and Key Lime Surprise - and is among the state’s largest individual employers in the industry. In October 2019, Revolution raised $29.5 million from Freehold Properties, a Las Vegas-based real estate investor. Former Chicago Tribune publisher Tony Hunter is the Chair of Revolution Enterprises.
Ally Marotti – Business Reporter, Chicago Tribune Media Group
With a focus on startups in the digital and more recently cannabis-related industries, Ally Marotti dispenses news, profiles and analysis on companies, individuals and trends impacting commercial cannabis sectors. As The Chicago Tribune remains the largest news gatherer in the midwest, Marotti’s coverage is circulated widely among both insiders and those with a passive or even hesitant interest in the sector. Her Tribune colleague Robert McPoppin also covers the industry, with a focus on happenings in the Chicago suburbs.