Among the 18 states that have legalized adult-use cannabis in the U.S., six are still in the regulatory period of finalizing their program frameworks before officially launching commercial sales. Those states are Connecticut, New Jersey, New Mexico, New York, Vermont, and Virginia.

For vertically integrated Verano, founder and CEO George Archos says expecting and preparing for legislative and regulatory delays are key to ensuring growth. Verano’s current portfolio encompasses 15 states, with active operations in 12, including 12 production facilities comprising more than 1 million square feet of cultivation.

Specifically, Verano’s footprint extends to two of the six states gearing up for upcoming retail launches: New Jersey, which legalized adult-use cannabis through voter-approved Question 1 in November 2020, and Connecticut, which legalized adult-use via passage of Senate Bill 1201 in June 2021.

While Verano’s 4,000-plus employees are also going through organic expansion phases in Florida, Nevada and Massachusetts this year—not to mention the potential for additional M&A action geared toward gaining access to new markets, like New York, Minnesota and New Mexico—the company’s success in New Jersey and Connecticut depends heavily upon calculated moves riddled by launch dates, Archos tells Cannabis Business Times.

Editor’s note: This interview has been edited for style, length and clarity.

Tony Lange: What were the biggest challenges that Verano overcame in 2021?

George Archos: Legislative delays have been an issue for us, but we’re used to these hurdles. In the cannabis industry, although you might think a store might open on a certain date, it usually never works out that way. You have to wait for the regulator to come and inspect, there’s timing issues, etc. For instance, in New Jersey, we thought the adult-use rollout was going be in Q4 or even end of Q3 of 2021. Here we are in Q1 of 2022 and it still hasn’t happened.

And legislative delays are tough for us because we anticipate something, and then you go through a construction process, then you go through a hiring and training process, and make sure you are ready for these things. There are major costs associated with that. And then when it doesn’t happen, it’s a little bit of a letdown. It’s a burn on the capital side, and it’s something that we can’t control. But we’re used to it in this landscape. Those issues are also why we’re here—because we know how to overcome them.

TL: What is one key area where Verano anticipates growth in 2022?

GA: New Jersey and Connecticut should both be turning over to adult use this year. Obviously, we’re very excited about that. We’re putting the people in place, we’ve done an extensive amount of construction, all the training, and now we’re ready for the conversion. What we’re looking for now is to be able to participate in a successful program, make sure it launches and that there’s plenty of product for the consumers. And we’re ready to fulfill the obligation of being a grandfathered [medical] operator by making sure it’s an efficient, well-thought-out process [for adult use]. We don’t want long lines where people have to wait for hours. We want to make sure that we don’t run out of product.

And then, throughout the country, we have expansion going on in Florida, Nevada, Massachusetts, and elsewhere. So, there’s a lot going on. And that’s all organic growth. I also anticipate some additional M&A throughout the year as we continue to look at deals. We were pretty acquisitive in 2021, and I don’t think we’ll be as active this year, but I’m assuming that we’ll be doing some deals as well throughout this year.

Editor’s Note: This interview was conducted before Verano entered a definitive agreement to acquire Goodness Growth Holdings Inc. for $413 million. Those details are here.

TL: When a state launches an adult-use cannabis program, how do you make sure supply meets demand?

GA: We look at how many people are in that market, we look at how many operators there are, and then we kind of see where our niche is going to be. And we make sure we build out enough to where we don’t want oversupply, but we want to make sure there’s enough of our brands in the market. So, we started [additional] construction over a year ago for our New Jersey facility in preparation for adult use. (Editor’s note: The facility is operational and supplying medical cannabis products in the state.) It’s a state-of-the-art, 120,000-square-foot facility that’s equipped with a production kitchen, production lab, big output, large canopy. We’re ready to go. We have multiple form factors and SKUs that we’ll be putting out of that facility, things that have been tested throughout the country that we know are successful, and the consumer likes and appreciates these products, and we’re excited to get them onto the market. Hopefully we see a late February start to the adult-use program in New Jersey, but we’re waiting, and we’ll be ready.

TL: What specific challenges do you forecast for the cannabis industry as a whole in 2022?

GA: Again, it goes back to the legislative delays. New Jersey and Connecticut, for example—when do they launch? How early do you start hiring? How early do you start the construction process? How far do you want to get ahead? Because this product does have shelf-life issues. If you start growing too much, then what? Now you have to destroy it. And there’s costs associated with that. Once you destroy it, you no longer have the product.

The other thing is, we don’t know what’s going to happen next with COVID. Employee issues, they’re a real thing. These stores and these facilities need to be staffed up. So, if another COVID variant comes through and knocks out your employees, then there’s a supply-chain issue and business interruptions, which makes it very difficult to operate.

TL: Has Verano faced any staffing issues as it pertains to filling positions or attracting and retaining talent?

GA: No, fortunately for us we’re a growing company. So, we offer opportunities for new employees to not only start where they want to be, but there are future opportunities for growth for them. Maybe someone who’s a wellness specialist at a store grows and ends up being an area director somewhere across the country. We have close to 4,000 employees, so we have those opportunities. From that perspective, it’s an exciting industry and it’s been absolutely phenomenal.

TL: What all went into hiring Verano’s new chief financial officer, Brett Summerer?

GA: We did an extensive search to find Brett. He comes from a very impressive background across multiple industries. He was in the U.S. and Asian markets with General Motors, obviously a very large company with manufacturing background. He was in the pharmaceutical industry at Corning Inc. And he has a great CPG background, which applies to cannabis, with Kraft Heinz.

I think he’ll help us on the cultivation and processing front, adding additional efficiencies. So, he’ll be able to take us to the next level.

TL: Do you think maybe five or 10 years ago that people who have a resume like Brett’s would even be available for top-level positions in the cannabis industry?

GA: I had a bit of trepidation with myself entering the cannabis industry. It’s a federally illegal drug and, at that time, there was concern about what’s going happen. We have families. So, yeah. A lot of these candidates weren’t available 10 years ago, or even five years ago. The progression in the cannabis industry and how this is becoming more mainstream is allowing the opportunities for folks like Brett to come into the space because you’re becoming more comfortable with it.

That’s exciting for a company like Verano because we get to bring in top-tier talent. And although we love building from the bottom up, it’s nice to be able to bring in some people with experience to help train those people that are coming in from the bottom and going up.

TL: Where do you see your company going in the next one to five years?

GA: Verano is going to continue to expand as the cannabis industry expands. Additional states will come online for medical or improved medical programs. States with current medical programs will continue to transition to adult use. So, we’ll continue to grow both organically and through M&A that fits the Verano platform. We’re going to continue to maintain our sound financial principles, our premium position with our product offerings, and with all of those things, we should continue to keep an industry leading margin profile.

At the same time, growth is one of our top initiatives. So, we’re excited to see more happen. The story of cannabis is just getting started. There are so many more states that need to implement programs. I think over the next two years, we’ll most likely see Pennsylvania, Ohio, Maryland, Florida, and some additional states transition to adult use. We see Alabama bringing a medical program on. I think something happens possibly with Texas and some other states later. The growth is really astounding ahead of us. What this industry has done is amazing, but we’re just getting started. There’s so much more opportunity in the U.S.

TL: Is there anything specifically that Verano has done or is doing to prepare for the possibility of federal legalization?

Photo courtesy of Verano

GA: We’re definitely deploying all our brands in every state that we operate in. And as we continue to grow, we’ll put those brands in additional states to be able to establish our brand profile and brand recognition, which will help us in the future. If and when interstate commerce does happen, we’ll already have a good presence with all of our brands in quite a few states.

That being said, federal legalization is most likely quite a bit away. I think we’ll see maybe some form of SAFE Banking or MORE Act or something this year, some social justice reform, but there’s a lot to be done on the federal legalization front. And for a company like ours, Verano, federal legalization is not something that we need to continue to thrive. Obviously, it’s welcomed. We’d like to see something happen. But I think it’s going take some time for full federal legalization.

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