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Acreage Holdings Announces Changes in Executive Leadership Team
Acreage Holdings grabbed the cannabis industry’s attention when it announced on April 11 that former House Speaker (and longtime marijuana prohibitionist) John Boehner and former Massachusetts Gov.
Bill Weld were joining its board of advisors.
“We couldn’t be more pleased and honored to have Speaker Boehner a part of our organization,” CEO Kevin Murphy (pictured left) tells Cannabis Business Times.
“The reason for that is very simple—he’s a very pragmatic and a very smart man. He’s very well recognized in this country and beyond, but he also helps us help each other.”
Boehner and Weld are not lobbyists, Murphy says, but rather guides for the company.
Not only do they understand how government works, but Boehner has business experience through his time as an entrepreneur and small business owner, while Weld acted as a senior law enforcement member at the U.S.
Department of Justice prior to his years as a governor and has a background in private equity.
“They have a keen understanding of who’s doing what when and what motivates people in government to do what they do, and to have that knowledge in-house to really migrate through all the twists and turns is going to be a huge help for us,” Murphy says.
The announcement sent shockwaves of optimism and criticism through the industry, as both men bring powerful reputations to a dynamic moment in cannabis reform.
While Weld has been advocating for legal marijuana since 1992, Boehner’s evolution from cannabis naysayer to cannabis supporter is reflective of the broader narrative of changing attitudes on the plant in the U.S., Murphy says.
“It’s really our goal to demystify the plant, and really show people that … cannabis can be a real mainstay for people that are suffering,” he says.
“I think what makes the Speaker so interesting is historically he was a naysayer, like a lot of other people in this country.
Frankly, like me.”
Acreage Holdings' Wellness Connection of Maine, where the company holds four of the eight dispensary licenses.
Acreage Holdings is preparing to transition to the adult-use market in the state in 2019.
In 2011, Murphy invested in four of the eight medical license-holders in Maine, becoming a part of their operations.
“When I got involved in 2011, I was a little bit cynical when asked about if I wanted to participate because there was a lack of knowledge on my part around the plant itself,” he says.
“I have in turn done a 180-degree turn, and now I’m probably one of the strongest advocates for cannabis. John, too, is frankly smart enough to understand that the people of this country have identified cannabis as a real opportunity to supplement for opiates and other drugs that might be more addictive and more harmful.”
And while many industry observers hailed the announcement as a positive development, much of the conversation on social media revolved around the missed opportunity in Boehner’s tenure as a congressional representative.
For Murphy, bringing Boehner aboard is a sign of more good things to come, now that the industry is gaining steadier ground in 2018.
“One thing that I admire about John … is that he has the courage to come out publicly and be vulnerable enough to change his mind,” Murphy says. “I think when we announced the news, there were a couple of people that were a little bit cynical about his desire to want to join our board or a little bit critical to the fact that here he is, an opportunist.
… We are proud that he has not only joined the board of a cannabis company, but he’s in fact joined our board. We hope to use his voice and his influence to help people help themselves.”
Silent and Steady Growth
Recent headlines like the Boehner and Weld announcement have pulled the firm into the spotlight. But even before Acreage Holdings burst onto national headlines, the company had been quietly investing in 11 different state-legal cannabis markets.
As a money manager on Wall Street, Murphy learned the value in being early and correct in your thinking.
Cannabis company Acreage Holdings plans for Canadian IPO
And Acreage Holdings was early to the cannabis industry—investing in Maine in late 2011—and correct in thinking that the portion of Americans who support legal medical and adult-use cannabis would continue to rise.
Today, the multi-state cannabis corporation has expanded from coast-to-coast with stops throughout the Midwest, holding licenses in Maine, New Hampshire, Massachusetts, Connecticut, New York, Florida, Maryland, Pennsylvania, Illinois, Oregon and California. Behind this expansion, Murphy says, lies a passion for broader access to medical marijuana.
The interior of Nature's Care Company, Compass, in Illinois, where Acreage Holdings holds a cultivation license and operates two dispensaries.
When Acreage Holdings first got into the cannabis business in 2011, the legalization of cannabis was not as popular among U.S.
voters, which prompted the company to build the organization quietly and stealthily from state to state, Murphy says.
“We wanted to assure ourselves backing in each state, and we didn’t necessarily want to be the big, bold brand, so we tended to operate in the various states under different names,” he says.
“In one state, we’re Prime Wellness of New Hampshire. In Illinois, we’re Nature’s Care.
Leading the way to safe, affordable cannabis for everyone.
The west coast … had different names, and we also wanted to have a local feel.”
Now that Acreage Holdings has created one of the largest cannabis footprints in the country, having one consistent brand that is nationally recognizable is becoming more important, Murphy says.
“We are now working on a consistent dispensary name called The Botanist, and we’re looking to also brand our cultivation side of the business,” he says.
A national brand will help assure patients and consumers that they will be treated with the same compassion by educated staff members in all Acreage Holdings dispensaries, Murphy adds.
Acreage Holdings’ expansion has not been without its challenges, however. Earlier this year, the company was embroiled in a lawsuit alleging it refused to compensate a consultant who worked on applications that led to the company winning a cannabis license in Pennsylvania.
According to a civil lawsuit filed in federal court in January, the company hired cannabis consultant Harris Silver to lead its bid for a medical marijuana cultivation license and a dispensary license in Pennsylvania.
After Acreage Holdings was awarded a cultivation license but not a dispensary license in the state, the company severed its relationship with Silver and refused to compensate him for any services rendered, according to the case, which was first reported by Leafly. However, it remains unclear whether a contract was in place, and whether the company needed to win both licenses for the agreement to remain intact.
The company declined to comment on the lawsuit.
Attorneys at Cozen O’Connor did not respond to requests for comment as of publication.
(Editor's note: Plaintiff Harris Silver dismissed the case against Acreage Holdings, according to federal court documents filed June 12, 2018.)
Each state’s cannabis market may be different with its own unique regulations, but Acreage Holdings has adapted to each unique situation. States like Maine, New Hampshire and Massachusetts have vertically integrated markets, allowing companies like Acreage Holdings to grow, process and dispense cannabis.
“That’s the format that we’re most comfortable with, given we’d like to control the entire process from seed to dispensary,” Murphy says.
In other states, like Connecticut, businesses can either grow or sell cannabis, and while Acreage Holdings applied for both cultivation and dispensary licenses in the state and only won the dispensary license, it would like to expand into the cultivation side if afforded the opportunity, Murphy says.
Cannabis growing in Acreage Holdings' cultivation facility in Massachusetts, where it operates under the Prime Wellness Centers brand.
The company holds three licenses in the state with 68,000 square feet of cultivation space and the ability to operate seven dispensaries.
Creating standard operating procedures for multiple states has been a unique opportunity made possible by the company’s multi-state expansion, allowing it to find efficiencies and consistency across different markets, he says.
If the company discovers a lighting system that works well at a cultivation facility in one state, for example, it can then purchase the same lights in bulk for its operations in other states, often at discounted prices.
In addition, Acreage Holdings has one central team that can run the organization in each state.
“We don’t necessarily have to replicate every new state with new thoughts and new staff,” Murphy says.
Acreage Holdings IPO: Could This Pot Stock Be the Next Tilray Inc?
“We have a fairly sizable bench that we can draw from.”
Although Acreage Holdings originally launched into medical-only markets, it has transitioned to adult-use when recreational markets opened in states where it was operating. It has not been a particularly difficult transition because, as Murphy puts it, the customer’s experience should be the same whether cannabis is used medically or recreationally.
Motivated by Medicine
Acreage Holdings has expanded into Pennsylvania’s medical market, where it has been awarded one of the state’s 12 grower/processor licenses, operating under the Prime Wellness of Pennsylvania LLC banner.
The company has also been chosen by a major university in the state to participate in clinical research as a partner producer. (The name of the university has yet to be announced.)
“We feel very fortunate to have been chosen by one of the universities to embark on clinical work,” Murphy says, “and the reason we’re so excited about that is it’s been and continues to be our desire to bridge the anecdotal stories that you hear every day to clinical stories.”
In particular, Acreage Holdings would like clinical research to explore how medical marijuana might put an end to the opiate crisis, Murphy says.
“We’d like to try to put a significant dent in the fact that a 115 people die every day from an overdose of opiates,” he says.
“We have found that 60 percent of those deaths have been initiated by prescription drugs, so if we can provide a [properly dosed], clean, consistent medicine for these people and … substitute cannabis for opiates, we believe that we can make great strides.”
Acreage Holdings' Prime Alternative Treatment Center in New Hampshire, where the company holds one of four licenses in the state and operates a 30,000-square-foot production facility.
The time Murphy has spent in the cannabis industry seeking to prove medical marijuana success stories through clinical research has held some of most joyful experiences of his career, he says.
“People often talk about, ‘I’ve had cannabis for this issue or that issue,’ and the default for the naysayers in the space is, ‘Well, it’s all anecdotal, nothing’s been proven,’” Murphy says.
“We intend to prove it.”
And patients take precedence over profits, he adds. “Sure, we’re commercial, and we’d like to make full margins in this business, but one of the drivers to create these entities—and these profitable entities—is because it is our desire to spend resources on the clinical side of the business.”
Some of Acreage Holdings’ employees have personal stories involving medical cannabis, which further motivates the company to continue its efforts and expansion in the space.
“These are folks that we’ve been able to bring to our organization [and] their favorite day of the week is Monday because they’re back at work and they’re excited about what they’re doing,” Murphy says.
“I think that’s really a key component to the success we’ve had historically.”
Looking ahead, Acreage Holdings plans to become a publicly traded company this year to further its multi-state expansion.
News and Insights
Although Canadian markets have historically been friendlier to cannabis initial public offerings (IPOs), Murphy says the company would go public in the U.S. if afforded the opportunity.
“If we are at the point of going public [and] receive an invitation from the United States to do it on one of the major exchanges, then we would probably opt to do it in the U.S., but given there’s no invitation extended to date, we will then look to go public in Canada,” he says.
The ability to access the public markets will allow Acreage Holdings to continue to grow, Murphy adds.
“We’d like to build a robust balance sheet for us to go out and be an aggressive aggregator of further assets in the United States,” he says.
“Our goal is to be one of the major players in the world of cannabis, and so [the IPO is] a very important goal, front and center for us.”
Photos courtesy of Acreage Holdings; John Boehner headshot © Terra Eclipse | Wikimedia