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Wednesday, February 8, 2023

Staking a marijuana claim in flyover states: Q&A with Greenlight CEO John Mueller

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John Mueller likes to describe Greenlight Dispensary as the biggest multistate operator in the marijuana space you’ve never heard of.

And if you don’t live in Arkansas, Missouri, South Dakota or West Virginia, he’s probably right.

The Kansas City, Missouri-based company operates 24 dispensaries in those four states, with another eight retail locations under construction in so-called flyover states.

That’s one of several strategic differences compared to other MSOs, which tend to plant their flags in more mature markets on the coasts and other heavily populated areas.

“We still have the gas pedal down on the dispensary front,” said Greenlight CEO Mueller, who aims to have 40 retail stores operating by the end of the second quarter of 2023.

For now, Mueller and his growing team of nearly 400 staffers are content competing in less-crowded, limited-license markets, where Greenlight typically enters as a medical marijuana retailer before regulators or voters establish an adult-use marketplace.

The serial entrepreneur has grown and sold businesses over the years in a variety of sectors, including food processing, construction, financial services and equipment manufacturing.

As CEO of Acres Cannabis and Acres Cultivation, he oversaw the Nevada-based company’s sale in 2019 to MSO Curaleaf Holdings for $70 million, plus earnouts, in a cash-and stock deal.

The Acres sale, along with gained industry insights and a push to address niche-market opportunities, helped Mueller vertically integrate Greenlight rather quickly.

The company enters 2023 debt-free and profitable, according to Mueller.

Mueller sat down with MJBizDaily on two recent occasions for wide-ranging interviews in which he expounded on Greenlight’s contrarian business strategy, growth plans and expectations after another challenging year in the cannabis industry.

How is Greenlight positioned after the midterm elections, particularly in your home state of Missouri, where voters approved legalization?

With Missouri going 53% of the vote in the right direction, it’s really a game changer for Greenlight.

As a company, we’ve got 15 locations currently open, strategically placed throughout the state.

We have one that’s right on the state line of Kansas.

We are working with the (Kansas) Legislature to do a medical program as well and get to decriminalization, but that stuff, as we know, takes a couple of years.

What’s your take on the midterm elections regarding marijuana legalization and the heavy-handed loss in Arkansas, where Greenlight has a few medical cannabis shops?

It was a mixed bag.

Arkansas was not successful in their ballot initiative and took a 12-point beating down there. We were behind it, and we helped fund a portion of it.

Obviously very disappointing to not see Arkansas go adult use.

We are working with regulators down there to basically allow some reciprocity and some other things … but it’s going to be tough to come right back with an adult-use initiative in the general election.

It’s going to be tough with the new governor there and obviously the Legislature that’s very heavily skewed in a conservative manner.

Another miss on federal banking reform for the cannabis industry. What are your thoughts on the most recent failure and prospects ahead?

Obviously, the entire industry is disappointed that (Democratic Majority Leader) Chuck Schumer could not get the bill attached.

Quite frankly, I believe we had the support throughout the year to bring it to fruition.

I think (Republican Minority Leader) Mitch McConnell outmaneuvered him, unfortunately to the detriment of the industry, on SAFE Banking, which has broad, broad support.

We have filibuster-proof votes that are attached to that bill, and we still can’t get it to the floor even as a stand-alone.

We would love just to see a SAFE Banking bill come on its own and get voted on.

Beyond Missouri, what other market opportunities lie ahead for Greenlight and the industry at large?

In South Dakota, we’ve got a big push up there. We’ve got one store open and cultivation, and we’ve got another six coming.

I think we’ll be voting for adult use in the general election.

In North Carolina, we see something coming out of there in Q1 or Q2, and then Kansas, we think, is also going to be coming around in a similar time frame.

We think we could see some legalization of a medical marijuana program there.

Alabama is just 10 days away from accepting applications for those licenses. So that’s going to be highly competitive down there.

And that next round of applications are finally going to get spit out in the state of Florida, so we see a bunch of unique opportunities.

How did the company sort of reinvent itself after some initial missteps?

We made a whole lot of mistakes on Acres and Vegas and California operations.

We’re pretty efficient, we’re frugal with our capital and how we deploy that. We haven’t raised a lot of money.

But I think having a local presence and being from these markets has really been the difference for us to get up and operating efficiently.

Part of that efficiency is converting vacant real estate, such as abandoned fast-food restaurants.

How big of an undertaking is that, considering the high regulatory environment?

Three-hundred and fifty thousand bucks is probably our average to convert.

So we are on the inexpensive side of probably every MSO. That’s kind of our magic number to get in any of these new stores we’re opening.

Discuss the company’s retail strategy, particularly avoiding mature markets.

We kind of like being in the flyover states. Most of these MSOs are going to realize this is a wonderful market here in the Midwest and in the states were attacking.

Right now, they’re not really in our sandbox, and it’s allowed us to get out ahead of this game, establish ourselves and build the Greenlight brand.

We’re not too interested in the Northeast or California or Oregon.

Source:  Staking a marijuana claim in flyover states: Q&A with Greenlight CEO John Mueller

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