In this episode of our cannabis business podcast, we interview Dr. Kyle Kingsley of Cannabis MSO, Vireo Health.
We cover topics ranging from:
- Raising Capital and Going Public as a Cannabis Business
- Complex Cannnabis Compliance
- Tips for new cannabis business operators
- Why Kyle got into the cannabis industry
If you need help with improving the financial performance of your cannabis business, then please reach out to GreenGrowth CPAs via our website or call 800-674-9050.
All right. So with us today, we have Kyle Kingsley, founder and CEO of Vireo Health, a public company on the Canadian stock exchange board certified emergency medicine, physician serial entrepreneur inventor. Kyle, thank you for joining us today.
Hey, it’s my pleasure. Thank you for having me
Start off with people that don’t know. You tell us a little bit about your company, who you are kind of the 30,000 foot look, and then we’ll dive in a little bit deeper.
Yeah, so, you know, in a few words, we really see various sort of the, the science focused MSL, and we get kind of thrown into this, you know, being a quote unquote medical organization, which is a part of what we do, but that’s a small segment of science. And so video has science as its core differentiator. And I also think we have, uh, probably if not the, one of the most dramatic upsides from a regulatory standpoint, with our current footprint in our five core markets, uh, the five core markets, New York, Minnesota, Maryland, Arizona, New Mexico, all of which could go adult use in 2021. Yeah.
I saw that. And that seems you guys are like in 10 different States or you’re at least expanding your footprint with your expansion plan too.
Yeah, we, we have, uh, we’ve decided to really focus and it’s a little less glamorous, but if you look the relative upsides of our core five markets versus our complete 10, uh, you know, that just it’s really a no brainer as far as, as the, the return on investment for our efforts. And so Minnesota, New York alone could end up making everything else. We do irrelevant if you end up with a Florida light situation when they add flower, uh, there’s just a lot of great outcomes, uh, within these five markets, uh, our secondary markets, kind of the places that we got into, uh, following the RTO here in March of 2019, uh, that would include, you know, Puerto Rico, Massachusetts, Nevada, uh, Ohio, uh, we’re interested in transitioning on to some of those assets or maybe developing them, developing them down the road. But right now we’re laser focused on the five core markets, Minnesota, New York, Maryland, Arizona, New Mexico.
Yeah. That makes sense. That makes sense. You’ve got to put the 80 20 rule and really double down in the markets that are going to have, again, that really big upside potential. You’ve got New Jersey coming potentially online, which kind of we were talking about potentially being our group is like a Northeast pack as soon as like once New Jersey falls, the rest of the East coast and the new England area is going to just kind of turn on and it really move things fast. There’s gonna be an expedited process. What are you guys’ thoughts around how the Northeast shakes out how the East coast shakes out as a, as a primary market comparable to like a Los Angeles or to one of the other bigger deals?
Yeah. You know, the East coast gets to in the, in the, the Midwest, frankly get to sort of capitalize on everything that we’ve learned from the West coast. And so everything that has been great, everything they’ve done poorly, we get to, to capitalize on that and really do it the right way. And so I see, uh, you know, just the, the key is really just a better set of regulations. And by better, I don’t necessarily mean more strict. It just needs to make a lot more sense, uh, for both businesses and for the consumer. And so you can’t have, you know, thousands of, of black market operations in a state and, uh, you know, expect that to be a viable, a viable cannabis business for, for people that are operating there. And so I think what you’re gonna find is that, that, uh, you know, on the East coast, they’re going to take an appropriate approach with, you know, a limited number of operators as far as cultivation and processing goes probably more aggressive as far as the number of dispensaries, because that’s a little bit easier to regulate.
Um, but we’re a big fan of safety. We think you need to put that first. We really think that you need to limit the number of operators so that you can control what people are getting. I’m also a big fan of home girl. I think the, the, the Holy grail here is to have a well-regulated state run program, but you also give people the opportunity to grow plants at home. And, uh, that’s, to me, that’s a really interesting one, two punch where people could sort of do what they want at home with this relatively benign plant, but you also have very safe, very regulated, very, um, precise, uh, set of products that are offered to the public via it for medical health and wellness or adult use reasons,
A hundred percent, a hundred percent. You’re actually one of the first people as a cannabis business owner that is advocating people to, you know, do their in-home grows and use their rights to, you know, explore this type of medicine.
You know, there’s, you know, first of all, I think it’s right just as a humanist, I think that people should have access to this relatively benign plant, but it also makes sense from a cannabis business standpoint, I think that decompresses things a little bit politically, uh, let’s give the folks who know a ton about cannabis, the right to grow it at home. Let’s do a well-regulated system for those who don’t know, uh, aren’t able to grow cannabis at home and make sure that they have, you know, an optimal experience. They need safety. There can’t be pesticides. Uh, they need to have exacting precision on the dosing and the testing so that people know what they have. And so I think at least a better business outcomes, I think it leads to a better public experiences experience accessing those products. And then you’ve got this whole slew of people that are gonna, you’re gonna grow it at home and, and, you know, make their own experience with, with the plant. I think that’s sort of the, the ideal kind of balancing act
A hundred percent, a hundred percent. So I kind of want to change gears and dig into a little bit here is that I read somewhere that you were a cannabis skeptic at one point, and it kind of has evolved over time. I thought you’ve even, co-authored a book, the medical cannabis primer for healthcare providers, and I’m sure there’s a lot of respectable physicians, doctors, medical professionals out there that are in the same boat of being skeptical. So tell us a little bit about any particular studies or patient interactions. What made you change your mind from maybe being on the fence to being again, one of the biggest medical cannabis MSO in the country?
Yeah, you know, so I did emergency medicine for more than a decade Hennepin County medical center in downtown Minneapolis is where I trained, uh, moved on to the suburban emergency department level three trauma center. And so, you know, cannabis was just sort of irrelevant to me because as an ER, doc, it’s kind of the one thing that you just don’t pay attention to on the urine toxicology screens. So when the drug testing comes back, you know, you worry about the math, you worry about the alcohol level, but you would disregard cannabis because it just didn’t contribute to the clinical picture and it was safe. It wasn’t causing problems for people. Um, people don’t show up stoned in the emergency department unless they’re also drinking or doing else. Um, we always joke that in the emergency department, if you replaced alcohol with cannabis, we’d be out of a job because it would be Khomeini Cheetos versus getting a fighter, you know, uh, beating their spouse or, uh, you know, being out, drinking on the town.
Uh, so it was just really a benign substance. And so I was skeptical that there was any medical value to it. I really saw it as benign and not a problem for our society compared to alcohol. Um, but I, uh, I remember the patient that changed my mind. It was a gentleman who was shot in the back during one of the Gulf Wars. You just, you know, rock hard legs. And back from muscle spasm, he was miserable. I saw him three nights in a row. On the third night, I was giving him enough Dilaudid, which is an IV opioid that enough to kill you. Or I, uh, he had some tolerance because he’d been going down that path, but he said, you know, doc, when I was in California, I smoked cannabis every day and I was on no opioids. I had almost no pain.
And he was taking, you know, horse tranquilizing doses of opioids here in Minnesota. You refuse to smoke in Minnesota because it was illegal. He was a straight shooter, a vet, a pretty compelling guy who I believed. And, uh, that was the first time I thought, wow, that’s a really interesting alternative to opioids. That’s pretty compelling. I ran around, saw what the space had to offer. Minnesota came up with a very restrictive, medically focused law. And we won. We won that, that process outright. And we’re able to start operating under this over restrictive, medically focused law here in Minnesota, uh, which in retrospect, you know, it, it, it, uh, it’s probably the only way I would’ve made the step into the space. And now of course I’ve liberalized to the extreme, I believe in adult use. I believe in getting people access to this sort of the cognitive freedom concept where, you know, how sick do people have to be before they can start to access tools, uh, to improve their lives. And for a lot of people, cannabis can improve their lives. Obviously there are counter stories to that. Let’s get people access enough is enough
A hundred percent. I totally agree with that. Let the, let the people decide. People should be mostly responsible for the most part and their remedies, aside from that, that will kind of weed out. Those, those are edge cases that can, you know, dampen the whole party for everybody else. So kind of back to when you start to say, all right, let’s explore this. I read the company started in 2014. So kind of the early days let’s talk about that. You know, first license was in Minnesota. Yes.
Yeah. Right on. I, um, you know, I’m not from financially enabled circles. I’m, uh, I’m from Southeastern Minnesota, small farming community. And I remember the, the Minnesota came up with the law. It was very exciting. It combined kind of my three passions outside of my family who was horticulture botany agronomy, uh, which has always interested me business. I’ve started some completely un-sexy businesses in the medical documentation space. And then obviously medicine is a passion of mine. And so, you know, cannabis as medicine was sort of all three of those combined, it was irresistible. And, uh, I remember actually talking to my boss at the time and he’s just like, Oh, Kyle, you know, just this, the state’s going to go for the safe choice. And he was, he was kind of doing it to kind of put me in my place and say, know, what are you thinking?
There’s no way you’re gonna win. And we actually made that the entire premise of our application is how can we demonstrate that we are to the safe choice? I knew the PhDs in chemistry. I brought in a secret service agent as our, as our, uh, direct as a director of security. I just have to know all the people that fit into the, in, into the kind of the org chart. And so we applied, I needed some funds. I remember asking my wife who was eight months pregnant at the time. You know, I’ve got a great idea. I’ll drop out of, uh, emergency medicine. You can support me, let’s get a huge mortgage for a greenhouse, uh, that we can’t afford, uh, for medical marijuana license that we don’t have. And she said yes to that somehow. So we actually built the greenhouse from scratch before we had the license.
And, uh, so we won the application there thankfully would be the world’s biggest doghouse. If I had not one, I probably still live there today. But the other interesting story there is, you know, we’re really Minnesota founded and, and a lot of our investors are Minnesotans. Uh, had my dad down in harmony, Minnesota, my hometown get seven folks together around the fire. And I was hoping to raise two or $300,000. Cause I need naively thought that that was a meaningful sum in this space. Uh, this group, including, you know, a veterinarian, a few teachers, uh, some farmers, they committed to $1.2 million that night. Uh, this was July, 2014. And I think my hometown is probably thrown down for 3 million subsequently again, farming community, a thousand people. I had no idea that, uh, those kinds of funds were available there. Uh, but they saw it. They got it.
You know, they trusted, trusted me and my family and my, my, my dad was, was mayor of the town for awhile. Um, and you know, just everybody that I really respect down there showed nothing but support and very humbled to have this be successful as it has been. But with those folks in the seed round, you know, we raised on an $8 million valuation. And, uh, I remember thinking that how can I ask these people to invest in $8 million evaluation? Um, you know, we don’t have anything yet. And so again was my naïveté. And, uh, um, you live in, you learn, obviously if I can go back, I, I do some things differently, but I’m very humbled by our roots. And it really is, um, you know, really formed the backbone of what we are, which I think is a very upstanding Midwestern company. There are investors who seek out Midwestern and run founded companies, um, just because of, of that backbone and doing things the right way, which we really pride ourselves on
A hundred percent. Yeah. I’m from the Midwest. I’m actually in Michigan. I was living out in California for, uh, over a decade and yeah, the people are different throughout the country and there is, and what they value and, you know, it speaks volumes that a local farmer committee of a thousand people committed, you know, so much money to believing in something before there was any product. You know, it seems like pretty much of a, an edge industry when you get from the Midwest, it’s like, Oh, it’s, you know, tearing apart our communities when someone steps up to kind of champion the medical portion, that it’s no wonder why, you know, you got supported so heavily. So that’s, it’s great to hear that. But one thing I heard when you set up at the beginning is that you had all the right people is the only thing that we talk about at GreenGrowth CPAs is that cannabis is a team sport, right?
You couldn’t do this whole thing. You know, you can’t do this whole thing by yourself. So kind of tell me about, you know, your founding team and, you know, there’s probably, I’d looked at the C-level team. There’s lots of people, you know, over 400 employees, a very, very big operation, you know, what are the first few key team members that you, you went and got for this application then maybe subsequently after getting the license like, Oh, you know, we really need to call, you know, this person or that person, what were those first few hires that were critical to the success?
Yeah, great question. You know, I challenge you to find a more flawed CEO in the space than I, you know, I’m a physician huge strike against me in the business world. Uh, but one of the things that I do have is an ability to kind of compensate for my weaknesses. And so I right off the bat, I might, you know, this is, this is something I need to do. I need the integrators. I need the folks that, that are gonna do, gonna make this cannabis business a success. And so, you know, for us, it was very heavy on the science end of things to start. And cultivation is, you know, very emphasized in, especially in the, the application processes early on, and it’s a, you know, critical undertaking. And so for us, it was the, you know, the finance apparatus, uh, that was important. Uh, the science, uh, apparatus, which was a little bit different than the manufacturing processing.
There’s a lot of overlap there. And then the, the cultivators were key, you know, no thoughts on things like, uh, you know, investor relations or, you know, marketing, that kind of stuff was an afterthought, uh, you know, years down the road from back in those days. Um, I knew the right people. I had some physician friends that were good, uh, as far as being kind of integrators, uh, I had, uh, the chemists who were good at not just the science, but also the processing and manufacturing. And then I got some great cultivators that had been sort of operating in the gray market who could really help us on the cultivation side. Uh, you know, we’ve gone through several transitions since then the most recent, it was probably last November. Uh, it became apparent that we needed to do some, some reorganization. Uh, we wanted to upgrade the FP and a and accounting teams.
So we brought in a new CFO to do that. Um, we needed retail expertise since we brought that in and a gentleman named Patrick Peters, who’s been running a retail now for almost a year, smashing success. And, um, you know, there’s, there are so many components to the cannabis business. You know, you can argue that it’s, you know, seven or eight separate cannabis businesses that are vertically integrated operator. And so there’s sort of the high level overarching, uh, you know, expertise that you need, you know, the person who knows retail, the finance apparatus, but then you also need, need state specific boots on the ground general managers. And so we operate the general manager model, uh, very excited. We recently hired a general manager in Arizona, which was sort of our last outstanding need as an organization. Um, we did go through a bit of a bloodletting last February, where we closed down our New York office and we let go of some amazing people, uh, just because it was, they were a little bit too big for us, uh, but come full circle in the next 12 to 24 months, I anticipate we’ll need to reinvest in some additional marketing, uh, some additional sales.
Um, but right now the team is kind of carrying multiple mantles here and doing a great job across the board.
That makes sense. So it seems like you, you did dip into the, uh, legacy market of the illicit market to find some of your cause. One of the things that we’re seeing with people is like, Hey, it’s really, really hard to find talent that you may come from CPG or yeah. For medicine and things of that nature. But do you have the expertise in cannabis? So is hiring talent, finding talent, you know, find finding the people that really run the cannabis business from C-level all the way to front front of house inside your dispensary’s, you know, tell me about the challenges of hiring. Is there anything, any things that’s working really well, things you have had to avoid, you know, what has been kind of the sweetening, the pot thing? Tell us a little bit about your hiring process from the app.
Yeah. You know, one thing that we do well, I think is blending what we do, which is sort of the professionalism, the, the, the, the clinical aspects of things, the research with, you know, combining that with sort of legacy cannabis culture, what my ideal person, serving our patients as somebody who is an expert, bud tender, and a pharmacy technician who understands the science and medicine of cannabis, that’s going to give the best possible experience to everybody. We’re very Ignacio to people’s backgrounds. It is interesting. You bring up sort of the, the history of folks operating the illegal market. Very proud. We just, uh, co-sponsored an expungement clinic for expungement week. Last week in Maryland, we had 45 people come through the door and who we had lawyers and resources onsite to, to get their records expunged. And so I’m very open to bringing in people with that elicit history.
And, you know, there’s a lot of different variants of that. Obviously, if there’s a violent component to it, that’s different than somebody who got nailed with a few cannabis plants in their basement. And, uh, so we’re, we’re pretty, open-minded there. Uh, I have seen firsthand, you know, sort of what, you know, how nonsensical the current legal situation is. Uh, you know, we’ve had amazing people who’ve whose lives have been pretty substantially negatively impacted by, uh, accusations from disgruntled former employees. You know, we, um, it’s really, just to me, it’s just so bizarre, such a disconnect between policy and what the, what the, you know, our politicians are doing and what we the public want. And it’s time to fix that. It’s time to bring this out of the shadows and get this stuff expunged, get these people’s lives back in order who have been destroyed to some extent by, by nonsensical laws,
A hundred percent agree with that a hundred percent. Yeah. The, the laws are in congruent with the way the culture is of cannabis. And I think there’s going to, it’s a, I like to feel it’s more of a generational issue. Hopefully as time goes on, this stuff will just, you know, it is what it is, you know, it’s not a big deal anymore. So that kinda leads me into the next part, talking about the products, right? When you hear a medical only Cannabis MSO, you think of the very highest quality products, the highest ingredients, you know, you’ve got oils, vaporizers, capsules, different ratios, all these things going on. Tell us about some of your more popular products and maybe how you develop and test these products.
Yeah. Great question. So we actually have, um, again, the reason that we are deemed sort of a medical Cannabis MSO versus a science MSO is just because of the regulatory environment in which we operate right now, uh, in, in, in one year’s time, we may be in five adult use. And so I want to be very clear that science drives opportunity across the spectrum. And as you know, the overlap between a quote unquote medical product and adult use product is almost complete. And the one thing that’s often attributed to the medical side is sort of precision and quality, but I believe that that should be across the spectrum from medical health and wellness into adult use. Everybody deserves consistent products that are well-tested safe without pesticides. And so that’s kind of that core tenant that we bring is going to drive a lot of quality and comfort in the adult use realm too, and certainly health and wellness.
So that’s pretty exciting. We actually have a subsidiary called resurgent bio-sciences that acts as our R and D wing and our intellectual property development wing. Uh, it’s run by several individuals, our scientific director, Justin bueno, uh, our chief science officer, uh, uh, Eric Greenbaum. Who’s actually an IP lawyer in addition to being a pharmacologist. And then our chief medical officer, Steve Dom, or are kind of the main three in, within resurgent. And so they have kind of two, two tasks. One is to drive, you know, kind of nonstop product innovation into our Cannabis MSO. And a lot of that is going to be standard products because that’s what people want. Uh, but they do bring interesting opportunities. So yes, we bring very precise oils, you know, the best in class, uh, you know, capsules, tablets, all of this stuff, topicals we bring to the table, but flower is pretty interesting.
And we actually just, there’s been some press releases around something. We call Terp Safe, which is terpene enhanced packaging. And so one of the problems with flower that you see is that you put it in a jar, you store it. And even if you pump up the oxygen, put it under nitrogen and optimize the moisture, you’re still losing the terpenes in a hurry. They’re just so volatile. They break down. So why not permeate this, this nitrogen or the air or whatever you’re doing around the bud with terpenes. And so this is basically, it’s essentially, there’s a little reservoir in the cap for the jar. It’s a sponge that you soak intervenes and so naturally occurring terpenes. You can match the terpene profile, which is going to dramatically increase the shelf life of the bud. Naturally, it’s going to keep its flavor, uh, or you can enhance the flavor, imagine, you know, whatever you want.
Imagine a cinnamon flavored bud. You can impart additional terpenes onto the bud and augment its flavor all naturally. Um, consumers are gonna become much more sophisticated. They’re going to demand this type of thing. Uh, moving ahead, they’re not going to be satisfied with blood. That’s even been sitting around for three weeks post cure because the terpenes are gone and they’re going to demand a, you know, something like this and this, you know, this could become the standard of packaging for bud period, uh, sorta in, in volume or just small jars. So I was pretty exciting. You know, we, we actually have a partnership with eco, uh, with E bottles. And, uh, so there’s two paths. We’re building our own brands around this, but we’re also going to sell this to our competition. This is, this is kind of too good to, to keep for ourselves and, uh, excited for this to become standard packaging. Moving ahead. I think that’s possible in the next few years, as the flower consumer becomes more and more discerning
A hundred percent, I think, and we’ve seen some reports coming out of the flower is still a dominant product. People still want to try a flower in any, any way shape or whether it’s through, you know, through joints or through, uh, just the broken up flower in a bowl or a piece of glass there. So that’s, that’s an amazing idea. I mean, you, when you brought up that you haven’t whole intellectual property arm, I’m guessing there is, you know, the R and D component of not being, you know, kind of lumped into the Cannabis MSO. So you can kind of probably mitigate a little bit of the financial implications, that tax issues with that intellectual property of that nature allow you to license it out to other groups. That’s great that you’re not just like, again, keeping everything inside for yourself. That’s an amazing thing there. So, uh, adult, sorry, not adult use, but with medical use, some States don’t even allow flower to be sold as from my understanding, is that correct?
Yeah. And interesting. Our two primary markets being Minnesota, New York really don’t allow flower. You know, New York allows this metered ground flower. Um, but you’re just grinding up flower and it’s not ideal for anybody. Uh, we’re very excited about Minnesota, New York turning on that, you know, basically flipping that switch and the fact that we have a clear sort of line of sight to profitability free cash flow next year, without any regulatory change just shows how dramatic our upside really could be with some, some common sense changes in Minnesota, New York. Uh, we wholly, you know, we’re, we’re, we’re pushing very hard for adult use in both States. That’s, that’s kind of optimal from an access standpoint, but if it ends up being just flower in the medical program, that’s going to be a home run to maybe get your home.
Oh yeah. And that would be something that’s going to be huge. Just adds another level of product that I think it becomes a little bit more accessible for people and a little more social aspect to it. There’s a lot of social aspects to it, to any kind of a new brand or any kind of, uh, things of these nature. So that’s great that you have that there. So one of the things to talk about when you’ve got great products, but distribution is really, really tough to come by in a certain markets. So when you’re thinking about distribution for your cannabis business, right, did you guys, you started with the cultivation, how did you get those first few customers to believe in your product does not loud? Like, you know, I’m guessing that a lot on retail is out there for medical. How did you kind of break into that? Did you, you know, go, just build relationships? Did you know somebody, you know, this is the biggest problem. I think for these newer brands and newer cannabis businesses that are starting as they have no one to sell their products, if they think they have a great idea, but usually it’s not differentiated, you know, it’s just, Hey, we want everybody to have our product. How did you go about getting into your first few retailers?
Yeah, well, w kind of a little bit of a contrived situation. Our first few retailers were us, you know, we were completely vertically integrated for Minnesota in New York. And so where we got people’s attention was actually physician engagement. And so we’re sort of the masters of engaging with the physicians that are certifying patients. And that goes across all of our markets. It’s a primary driver, it’s kind of a pseudo marketing. Uh, that’s, that’s our main path to getting consumers and the cheapest way for us, uh, from, uh, you know, um, you know, price per acquisition standpoint is to talk to docs who certify hundreds of people a year. And if you ask positions in our core markets, um, you know, who the kind of the medical provider is, I think Curio the brand variable will come up as sort of the, the Cadillac medical brand.
And that’s just one of the brands we have. You had asked, what else is out? Uh, 1937 is our social equity brand product, predominantly flower focused. I we’ll be releasing this terpene enhanced brand with the term safe packaging. Uh, shortly. We also have a great brand called light bud, which really is just a decreased THC. It sort of hearkens back to the cannabis of the sixties minus the headaches and the lack of quality. And so that’s mainly pre-rolls, um, but light bud, you know, that’s pretty compelling, kind of a tongue in cheek, uh, brand that, uh, we’re pretty excited about. That’s going to get good traction. We can’t really build those. Pre-rolls fast enough for people. And, you know, as, as more and more people accept cannabis and, and bring this into their lives, there’s going to be a lot more of kind of the beer consumers out there versus just the maximum THC and make no mistake. We understand that the THC level was a major trigger for buying right now when it comes to flower. And we have something called the 30% THC project, where essentially we’re trying to drive as many strains, North 30% as we can in as many markets as we can. But, uh, there’s gonna be a lot of consumers out there that are not looking to be obliterated. They’re smoking know, you know, half a pre-roll. So that’s, that’s the thought of white bud.
It’s crazy. You have different brands that hit different target markets. You know, one thing, I think that a lot of cannabis newbies operators, they want to boil the ocean. They don’t want to focus on a specific subset of the market. I love that you guys have these different types of brands that hit and resonate on different reasons of why people use cannabis. So that’s a fantastic way to differentiate yourself. Also opens yourself up for different, uh, MNA activity to break off little bits of brands here and there and pieces, if, Hey, if it’s flattering, if it’s doing great, but you want to focus, you can pivot and turn left or turn right or full steam ahead.
Yeah. You bring up an interesting point there, just in the broadest sense, there there’s realities where resurgent bio-sciences could be purchased by big pharma or big tobacco or big alcohol. And I mean, I’m not excited about big alcohol or big tobacco buying us, but, uh, you know, you need to consider your shareholder returns in the business aspects of it, especially if we’re mitigating harm and reducing alcohol and tobacco use. Uh, I’m so excited about replacing what I call the terrible triad, alcohol opioids, and tobacco with cannabis products. Uh, and that’s really, the focus of resurgent is building that IP. I could see the Cannabis MSO and resurgent partying ways because it’s just such a compelling opportunity for a big pharma company to buy resurgent. Uh, whereas the Cannabis MSO is too much for them, and that ends up going the, the cannabis big cannabis direction. Uh, so it gives us a lot of flexibility. It’s made a lot of sense to investors that we’ve sort of separated the two and, uh, they’re very synergistic and resurgent is very much not expensive. That’s one thing I want to drive home is it’s not costing us a fortune. These are people that work in the Cannabis MSO. And so it’s, it’s sort of more of an IP contrivance and it gives us flexibility with partnerships, moving ahead
A hundred percent. That’s a great way to put it. So kind of looking into your explosive growth and, you know, I’m sure it came at a cost. It’s not free to get to the cannabis industry. As we talked about, you know, how are you seeking funding? How are you building up this war chest? And it started off, you know, we talked about the, with the guessing it’s a private placement or something of that nature, you know, large series rounds. How are you building up the war chest now? Is it something you’re looking for other investors or is it cashflow positive, such that you can just run off your own returns?
Yeah, we’ll be cashflow positive middle of next year. And we, you know, the only way that you can do become part of your year right now is to be at the public markets. And we’re so about, you know, OTC in the United States and then the CSE in Canada, um, we don’t have need for additional capital. And that came at a cost. Um, you know, we’ve raised a ton of money, uh, North of a hundred million dollars over the life of the company. I had an investor ask me, you know, why have you spent so much money? And, you know, it’s, it’s a very meaningful question. And the reality is we’ve, we’ve, we’ve won merit based licenses in places like Minnesota, New York, Maryland, Pennsylvania, Ohio, where there’s just no patient base. And so you burn and burn and burn, you know, you do the cap CapEx and then you have operating expenses with no patients there waiting for you yet.
You’re legally obligated to maintain the license to provide. And so we’ve really burned through a lot of cash, just kind of operational burn. It’s not from an inefficiency. It’s just been from kind of a lack of luck for regulatory change. Uh, you know, it’s put us in a decent spot now we’re one of a limited licensed States, almost exclusively. We have significant footprints, first mover advantage. Multi-year operating history with patients and providers and, and the regulators. And now we’re finally looking at switching over to adult use in these more liberalized, uh, regulatory setups, which is, which is, you know, really marvelous. So the way that we became flush with cash is we made a very difficult decision. We actually sold our Pennsylvania operations back in August one month ago for 37 million in total consideration. And that was basically a calculated, uh, you know, moving from six under-capitalized core markets, selling one and being well capitalized in five.
And so that’s why we don’t need capital at this point. We’re fully capitalized. Of course, once that happens, everybody’s coming out of the woodwork trying to lend you money because, you know, the balance sheet was pretty fluffed up there. Um, but we feel very good even without regulatory change. Our five core markets are going very well and regulatory change is highly likely in them all in the next six to 18 months. So we feel very good about things. Unfortunately, there’s no kind of way for investors to participate other than the public markets right now. Good for us. Not necessarily great for investors.
No, that makes sense. That makes sense. And so let’s talk about that. Going public, hitting the CSC, you did an RTO, which is reverse takeover, you know, punished, buying a shell company, getting backing yourself into the, into the market there. What pushed you in your group to make that move? And what was one of the biggest challenges of going through that process? I’m guessing the ifrifrst audit was no walk in the park. It’s pretty, you know, detail of what they ask you in the due diligence they go through. So kind of give us a little bit of a, you know, play by play. I’ll play by play, but to look at behind the scenes of what is it like to go public as a cannabis company, we hear about some of these companies, but you really never get to talk to the founders. So it’s, you know, open our eyes a little bit here, if you could.
Yeah. Um, it’s not like public on a major exchange in the United States. Let’s put it that way. Bay street runs a little bit differently. There is a really shady component to what’s going on up there. I’ve been kind of underwhelmed, um, on many fronts, just sort of what that looks like. Um, you know, I have, we happen to have the right legal apparatus. We have an amazing general counsel named Michael Schroeder. He and his team, uh, really drove a lot of that process. And so that’s one group of people that I didn’t mention in the hiring and, uh, sort of a legal apparatus, either outsourced or in-house ideally is critical to success in this space. Uh, we have two full-time lawyers right now in house and they work with a ton of different firms. Uh, and so that was, you know, it’s very stressful to do a road show.
We got out just before the capital markets imploded. We actually raised 51 million on, I believe it was a half billion dollar valuation. And so we, we hit it right. Um, and raised the money that was very difficult. We were, um, you know, we couldn’t have raised a lot more than that. That’s for sure. And then literally one week after we went public, the capital markets imploded, uh, you know, we got our heads ripped off along with everybody else. The difference was we didn’t have any debt and we weren’t hemorrhaging cash. We didn’t have a, a crazy burn. Uh, w we, we had the opportunity to sort of shut down some operations, not expand everywhere. We had hoped and really keep our heads down and survive. And so we were able to do that. Uh, we’re very fortunate. We still don’t have debt, which is pretty unusual for a, you know, an Cannabis MSO in tier two.
And it gives us a lot of opportunity. Um, you know, we don’t have the need for capital, so it’s a great time to be talking to people. And, um, you know, I don’t know if you have any other specific questions about the RTO, but there’s some, some interesting players North of the border. That’s for sure. Uh, very excited to transition to gap, to be traded in the United States. Our intent is to trade very early here and make that transition. And, uh, we’re, you know, standing up registration statement right now in the United States, working on all this stuff to, to get state side completely as soon as possible.
Yeah. That’s just, it’s going to be a while. It’s know. There’s a lot of activity right now with the SPACs buying up. These small operators has kind of been the hot, sexy thing for the past 12 months, especially in the past, like three to four months, this is kind of where, or how people are going public in the, in the other markets. Do you see potentially your IP arm potentially doing, going up by a spec or you really think that the big tobacco, big alcohol, big pharma is going to be the one purchasing those kinds of things? Cause it seems like the IP could be just as, as valuable as the MSL, if not more valuable due to licensing revenue and kind of all the tied up intelligence, I’m guessing there’s patents and there’s, you know, other intellectual property sources to that. Have you guys been approached by any specs or anything of that nature?
Yeah. You know, we’ve had conversations with everybody, certainly we’ve been approached by specs. I agree with you that the IP is a, is it more likely a more, these are both huge opportunities. Our footprint on the Cannabis MSO side is amazing, but I think it pales in comparison to like harm reduction tobacco, for example. So I’m with you and that the IP is the more substantial opportunity. The problem is it’s a long road to bring that to fruition for the, for the home run type scenarios. And so, uh, we get very little credit on the street if not zero credit for our IP wing. And so that’s sort of why we compartmentalize it. We’re essentially evaluated just as any other Cannabis MSO, you know, what, what is your 2021 EBITDA? Uh, what does that multiple for tier two? Boom. There you go. Um, it’s, it’s, it’s been interesting to me that we haven’t been given more credit for the markets that we’re in and the upside there, uh, you know, $10 million in revenue in New York is not the same as $10 million in revenue in Massachusetts, where you have a maximally frothy sort of terminal velocity market in New York, we’re scratching the surface.
Are we 1% of the way home in that market probably have a a hundred X upside in New York given the robust black market, uh, illicit market. And, um, uh, you know, it’s just, it’s been fascinating to be the place. The two places where we’re discounted is, you know, no credit for the IP. And I just don’t think people see how awesome our markets are. Um, you know, we don’t have a track record of revenue that, that inspires people with excitement. And that’s because we’re not an adult.
Yeah. I mean, they can’t allow people to just don’t see the potential opportunities they’re looking for the next 18 months returns or the next six months returns. But this is like, you know, the, your competition and everybody watching this, your competition is going to become CVS, Rite aid, Walmart Walgreens. At some point, everybody will be in this industry. And when you start to set yourself up for that, you know, 10 to 15 year horizon, you know, that’s the real, real long game of, we did a live stream today, uh, kind of talking about, you know, if you’re in this just for the money, you’re probably gonna lose compared to somebody who was in this for the long-term right. Cause there’s not a lot of money in cannabis, you know? Yeah. Your valuation is big and you raise all this money, but it’s not like you can go spend your stocks to buy food and things like that. You know, there’s a long game and you have to be very passionate about playing this game for the longterm because also the rules are changing every, you know, six to eight months, you know, this is never a static game to play. So it sounds like you hire people that are passionate about their specific niche and corner in the industry.
Yeah, that’s exactly right. Um, that’s passion is, is absolutely fundamental to, to, you know, maybe one of the most important, important components of hiring somebody. Um, and our leadership team, everybody on our team is so passionate about this. It, uh, um, you know, I’m not sure what I’ll do after this. Uh, I think I’ve got another five years of this left, uh, in me, uh, just because of, you know, it’s unbelievably taxing, but it is the most fascinating, remarkable field. I can imagine. Everything is cutting edge, the legal, the policy, the, the science, the, um, the business, the finance, it’s just, it’s, it’s all cutting edge, it’s all new. And it’s so fun to be on the right side of history and to help drive, uh, politicians to see common sense. And, uh, that’s a, that’s a, that’s one eye-opening experience I’ve had is just sort of how sausage is made politically. And, uh, we’ve had to kind of build pretty strong political apparatus in every state just to, to help, uh, help, um, common sense prevail.
Yeah. Sometimes you have to open their eyes and bring them to the water and put the water in their mouth and do the whole thing. But Hey, if that’s, yeah. If it takes that to, to, to make it happen, you know, you, you know, as much as we can sit and gripe about politicians, you know, what are you doing to really help move this conversation forward instead of just letting it, you know, media attack or whatever that’s going to be. So it’s great. You guys are participating in the political side of things.
Yeah. Yeah. It’s obligatory, uh, these, these, these political outcomes are, uh, really important for the consumer and really important for the businesses. And so that’s why I’m in this. I want to, I want to give our consumers, our patients a very safe, very unique experience, uh, kind of across a wide array of outcomes. And I also want to drive just amazing stakeholder returns for our, for our shareholders. It goes all the way back to my hometown in harmony. Um, you know, let’s, let’s, let’s hit everybody a 10 or 20 bagger here, uh, um, you know, and, and, and take care of people.
Yeah. I mean, that’s, that’s fantastic. That’s fantastic. So we’ve heard a lot about your story, a lot of the great things that have happened for you, but maybe give us some color and context to a few things that you would have done differently in either at the beginning stages or, you know, anything that pops into your mind, a story that, Hey, if we would have done this earlier, we would have avoided all this pain and friction later, what are some of those tips that not the common ones that we hear, what he hears, but like, what’s the insider information. If someone growing, you know, a very large Cannabis MSO, what, what should people be thinking about if that’s their goal, they can do different. And that’s a very loaded question.
No, I mean, I, um, I’ve made more mistakes than anybody. I know, I think, uh, in cannabis business and, you know, sooner or later, I want to know something and stop learning. Uh, but you know, I you’d have to be even more specific as far as the realm goes, you know, what would I do different about a financial one potentially. Um, you know, what I can say is I had no appreciation when I entered this space, how expensive it was, especially, um, you know, early, early days, uh, I would have raised on a higher valuation, a more reasonable valuation, which I didn’t think was reasonable at the time. I would have raised more money in the early rounds. Uh, we raised, uh, you know, 3.4 million back in 2014, and then the following January, we raised another 13 million just like that. And if, if, um, if I knew what I did, if I, what I know now, I probably would have capitalized on that, that, that momentum and, and a little bit more aggressive on that raise.
Um, I would have potentially avoided going public. The it’s easy to say, but we raised $51 million in conjunction with our RTO. And so, um, you know, there’s definitely something to be said. Um, if you’re capitalized to stay in private, if you can, uh, you know, we, we basically backed ourselves into a corner where we just, we had to access capital in the public markets. We had the opportunity to do it with the information we had at the time was the right decision. We didn’t know we were going to lose, you know, 80% of the stock value in that six months after that. Uh, so I would raise early raise often, uh, raise more capital than you need. And, um, you know, don’t be in a hurry to, to rush on to an exchange that doesn’t necessarily bring your investors, the liquidity they want. Uh, that’s one thing that, you know, most people, when they transition to public people get liquidity. Uh, our, our early stage investors still don’t have that. And, uh, you know, they will next year, but, uh, that’s a long way for people. And so, you know, going, going public North of the border is a lot different than going public onto one of the main exchanges here in the U S from a liquidity stand.
That makes sense. And thank you for sharing that. Yeah, cannabis is a very, very expensive business to learn how to operate and things of that nature. So if you could snap your fingers today, what would be one thing you’d change about the cannabis industry?
Um, I mean, including policy,
It could be policy, it could be mentality-wise and consumers might start with a policy change if you could snap your fingers.
So, but don’t use access. And, you know, I’d love to have a broader hand in what that looks like, uh, because you want to have some consumer safety aspects, but a broad scope, a broad reaching adult use on a state by state.