PharmaCann bets on progressive pot policy in NY, Garry McCarthy's new gig, Cresco exec dispenses advice and more!
In this Issue
PharmaCann and Cresco aggressively lobby in New York as state regulators mull adult-use expansion policy
Cannabis investments going to private companies, says Cresco entrepreneur in residence
Grown In co-founder Mike Fourcher wants you to subscribe to this newsletter
Former CPD chief McCarthy is getting paid to serve and protect MOCA Modern Dispensary
Illinois Cannabis Company Tracker: GTI, Cresco, Revolution, PharmaCann, Grassroots, Verano
Roll Call: Kate Rinkus, Anton Seals, Jeff Maters
PharmaCann and Cresco aggressively lobby in New York as state regulators mull adult-use expansion policy
New York Governor Andrew Cuomo has high hopes for recreational cannabis sales in the Empire State, projecting that a change in the law this year will yield $188 million in tax revenue by 2025.
As Cuomo borrows a page or two from Illinois governor J.B. Pritzker’s social equity-infused legislative gameplan, two Illinois companies - Oak Park-based PharmaCann and Chicago-based Cresco Labs - are investing in lobbyists.
Specifically, according to City & State New York, PharmaCann to date has paid $199,992 in fees to New York-based Mercury Public Affairs while Cresco so far has dished out $120,000 to Albany-based Statewide Public Affairs. Both companies own cultivation facilities and medical dispensary licenses throughout the state, including stores in New York City (primed to become the number one marijuana metropolis on the planet).
Cuomo, after previous unsuccessful attempts to legalize the plant in New York, has a new legislative template to guide him courtesy of Pritzker and the Illinois General Assembly. Last June adult-use cannabis became the law of the Land of Lincoln. Passage of the law became possible only after elected officials, social equity advocates and industry collaborated to define provisions and benefits awarded to individuals and organizations adversely impacted by the previous criminalization of cannabis-based commerce in the state.
According to Illinois Statute, companies like PharmaCann and Cresco (as well as Chicago-based Green Thumb Industries and Elmurst-based Revolution Global among others) negotiated the right to get a head start in recreational sales in exchange for $100,000 in social equity contributions and donations for each new location opened. Participating companies have the option of allocating funds to a Cannabis Business Development Fund, incubator programs, community colleges (including Oakton’s existing program) and qualified entrepreneurs.
Now that Illinois is online, industry awaits how a big, blue state like New York will fashion its laws and expand access to what some analysts already see as a multi-billion dollar market.
“I think social equity will be as big a part of New York’s bill as it was for Illinois, said Jeremy Unruh, PharmaCann’s director of regulatory and public affairs. “It may be even bigger because New York has a different progressive profile.”
PharmaCann operates a 130,000 square-foot cultivation facility in the state as well as dispensaries in Albany, Syracuse, Buffalo and The Bronx. Cresco last year acquired dispensaries in Williamsburg and Long Island, and now owns ten licenses to either sell or cultivate medical cannabis in New York State.
Unruh, an early employee at PharmaCann, pridefully says that his privately-held company “has never pushed back on any social equity provision proposed” by a state. He added that a legalization conversation that began with medical patient advocates now includes community representatives who will have a hand in deciding if and how cannabis becomes fully legal in New York.
“The same political winds that drove this industry five years ago are not the same political winds driving it today,” he said.
Cannabis investments going to private companies, says Cresco entrepreneur in residence
The tens of billions of dollars in lost market capitalization from publicly-traded pot companies in 2019 didn’t entirely go poof.
Some of that money, suggests Cresco Labs Entrepreneur in Residence Zach Marburger, is now being invested in the next generation of cannabis companies.
“Most of the publicly traded (cannabis) companies are down, so that money is going to the private markets", Marburger explained during a January 30 “Entrepreneur’s Roundtable” hosted at 1871 in Chicago.
“We are seeing people take advantage of the overall public market valuation, and are now pulling money from the top of the market to invest in private companies in the cannabis industry.”
Also on the evening panel, which attracted dozens of curious entrepreneurs and professionals from all ages and walks of life, was Fyllo co-founder and CEO Chad Bronstein.
Fyllo, a Chicago-based advertising technology company focused on commercial cannabis complexities, last year raised at least $16 million upon launch from lead investors JW Asset Management and K2 & Associates, both hedge funds.
Bronstein noted that Fyllo raised additional capital to fund its $10 million acquisition of Denver-based CannaRegs and the company’s 30 Denver-based employees.
Grown In co-founder Mike Fourcher wants you to subscribe to this newsletter
Grown In: Illinois is growing!
Veteran media entrepreneur, political strategist and pig roaster Mike Fourcher, with whom I first collaborated with in 1991, is signing on as co-founder of Grown In Inc.
Please subscribe to our flagship newsletter and share with all interested parties and persons in the sector.
Together, along with a growing roster of advisors and contributors, Mike and I are excited to tell the stories, introduce the characters and unlock the valuable vectors of business intelligence that are emerging as the result of commercial cannabis industry normalization in Illinois and across the country.
Stay tuned for more…
Former CPD chief McCarthy is getting paid to serve and protect MOCA Modern Dispensary
Less than a month after MOCA Modern Cannabis was fleeced for $200,000, the Logan Square-based boutique dispensary with designs on River North Expansion hired former Chicago Police Department Superintendent Garry McCarthy as a security consultant.
Private security for cannabis companies is a logical growth opportunity for qualified individuals and organizations, considering $40 million in cash was collected by a finite number of Illinois businesses in January 2020. Denver-based dispensaries, which due to federal banking laws are also largely-based businesses, get broken into approximately 100 per year.
Chicago-based Green Thumb Industries, which operates multiple Rise-branded dispensaries throughout the state, tapped former Illinois State Police Director Terry Hillard as a security consultant. To date, more than 18 former Illinois cops are now getting paid by entrepreneurs scaling cannabis-based business operations.
The January 6 overnight MOCA break-in apparently was an inside job, involving a secure vault, a safe and a blowtorch.
While archaic federal banking laws provide business opportunities for the McCarthy’s of the world - along with lower profile security gigs that pay up to $98,000 per year - requiring small and publicly-traded cannabis companies to continue to transact primarily in cash doesn’t seem like a long-term, scalable solution for one of the state’s fastest growing industries.
Having a lot of guns and money around the store may also be a buzz-kill for many consumers already upset about flower shortages.
While efforts to mitigate risk for Illinois banks wanting to serve local businesses that violate federal law may help at the edges, security problems resulting from too much cash on premises will continue to arise. Just want until people line up to freely light up in New York City (see above).
Businesses owners in an industry that legally operates in 40 states should be able to open up bank accounts. This won’t happen without a green light from Washington D.C., which all of a sudden has some extra legislative capacity.
There are electoral incentives for candidates and incumbents (including the occupant of the White House) to remove cannabis from Schedule 1 of the Controlled Substances Act, which would effectively protect banks from transacting with cannabis companies.
How many more six-figure break-ins will pioneers in this industry have to endure until the rules are inevitably changed?
Illinois Cannabis Company Tracker: GTI, Cresco, Revolution, PharmaCann, Grassroots, Verano
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.
Green Thumb Industries
Chicago-based Green Thumb Industries (GTI) struck another sale and lease-back deal with Innovative Industrial Properties (IIP), a Park City, Utah-based real estate company focused on cannabis.As part of the transaction, IIP will pay GTI $2.9 million plus transaction costs. It will also assume up to 4.3 million in tenant improvements. These types of transactions are increasingly common between growth-oriented but capital-constrained cannabis companies and real estate investment trusts. GTI in November sold a processing facility in Pennsylvania to IIP.GTI last week also opened a Rise dispensary to sell recreational cannabis in downstate Quincy. The company now has four recreational and two medical locations in the state.
Cresco Labs
Mindy's Edibles are now available in California!A joint venture between Cresco and Chicago culinary celebrity Mindy Segal, Mindy's Edibles offers consumers in Illinois, Nevada and now the sunshine state gourmet goodies with precise dosage information on the label.
Revolution Global
Here is a nice story from the NPR affiliate at Illinois State discussing how 200 additional jobs at Revolution Global's expanding cultivation center in Delavan is reshaping the town.
PharmaCann
Less than six months ago, Oak Park-based PharmaCann was nearly acquired by Los Angeles MedMen for more than $640 million (mostly in stock). That was deal was killed, and now MedMen's share are continuing to fall while the company is figuring out how to rework agreements with vendors. MedMen CEO Adam Bierman last week stepped down from running a company the company he co-founded with Andrew Modlin. The two co-founders are relinquishing voting shares back to the company. Investor Business Daily reports that Chicago-based Wicklow Capital will assume control of the company. PharmaCann co-founder Stephen Schuler is also a director of Wicklow Capital.
Grassroots Cannabis
Deerfield-based Grassroots Cannabis, which is scheduled to be offically acquired by Mass.-based CuraLeaf for $875 million, opened up a medical "provisioning" facility in Kalamazoo last week. Although recreational cannabis sales were approved in Michigan last December, the only stores open for business are in Ann Arbor, Battle Creek and Bangor.
Verano Holdings
Chicago-based Verano holdings, which last June was acquired by Phoenix-based Harvest Health and Recreation Inc. for $850 million in stock, was awarded a license to cultivate, process and sell medical cannabis in New Jersey.
Roll Call: Kate Rinkus, Anton Seals, Jeff Maters
A few words about three pioneers and personalities impacting Illinois-based cannabis industries.
Katie Rinkus
As part of a growing team of neighborhood-focused lawyers at Ravenswood-based G&G Law, Katie Rinkus presents, writes and advises on the complexities small business owners face as a result of cannabis commercialization. G&G has a nicely laid out summary of what individuals applying for Craft Grower, Transporter Infuser licenses need to know.
Anton Seals
A co-founder and executive director of Grow Greater Englewood, Anton Seals is a community organizer who works with company's like Elmhurst-based Revolution Global to help social equity applicants on the South Side obtain resources and guidance as they apply for a myriad of cannabis-based licensing opportunities. Learn more about Anton in our recent profile.
Jeff Maters
After helping to expand J.B. Pritzker's venture capital firm's investment focus into New York and California, Jeff Maters in 2016 started Network Ventures, a seed-stage venture fund. Maters looks at digital and network-oriented startups between the coasts, and is an early investor in Leafwire. Read more about Matters and his thoughts on the cannabis sector in our recent profile.