Rising High: Exclusive talk with vertically-integrated MSO Greenlight

Greenlight CEO John Mueller talks Missouri adult-use market, challenges, opportunities and more

In this edition of "Rising High," The Fly conducted an exclusive interview with John Mueller, Chief Executive Officer of Greenlight, a cannabis company with operations in Missouri, Arkansas, West Virginia, Illinois and South Dakota. Here are some highlights:

NIMBLE OPERATIONS: Greenlight is a vertically-integrated multi-state operator with 33 cannabis dispensary licenses, three in-house brands and more than 400 team members. The company has over 150,000 square feet of cultivation and manufacturing and more than 86,000 square feet of retail space. Greenlight aims to produce strong brands, strains and marketing with a mission to provide “Cannabis with Culture” in an inviting atmosphere.

“The key to our business is we have been very frugal with our capital and have been able to build a significant footprint mainly using profits from existing operations,” Mueller said. “As the entire industry is getting squeezed with these high-interest rates, it puts us in a much better position to continue to grow and expand.”

He noted Greenlight currently operates 26 dispensaries and has another nine locations in the construction process. “Hopefully we’ll get to 40 by the end of the year,” he said. “We’re continuing to be nimble and very entrepreneurial as we expand our footprint.”

MISSOURI ADULT-USE: Missouri officially launched an adult-use market in February and the state’s Department of Health and Senior Services approved Greenlight among the first in line to serve the expanded market. 

“We actually launched that ahead of schedule, which was a nice surprise,” the CEO said. “We found out we got our adult-use license at 8:30 in the morning on a Friday and we thought it was going to be Monday. We were ready for adult use at 10:00 that morning, an hour and a half ahead of schedule.”

According to MJBizDaily estimates, the market is expected to reach $550M in first-year sales with fourth-year sales projected to jump to $800M-$900M. “We’ve always said Missouri is a $1B market,” Mueller said. “It was in the black market before and its now coming on taxed and regulated. We see this being a $70M-$80M a month market very easily as we continue expand, which matches up to industry statistics of going from a vibrant medical market like we have to adult use.”

He added Greenlight dispensaries in the state are seeing lines outside the stores depending on the time of day and day of the week.

“Obviously, you get a tremendous amount of excitement when a state first launches,” the CEO said. “You look at your orders and where those orders are coming from and that will fluctuate that market, but we’re seeing tremendous growth at the store level and consumers coming in.”

ADULT-USE PREPARATION: Prior to the launch of the Missouri recreational market, Greenlight took several steps in order to prepare including doubling cultivation as well as adding drive-thru enhancements, digital kiosks and expedited lines for patients.

“When you see that influx of sales and the new consumer base coming on, it’s an obvious choice to make enhancements,” Mueller said. “We have a 96,000 square foot facility. We went in and basically doubled the amount of lights, which doubles the effective amount of output from a cultivation standpoint, and we expanded into two manufacturing facilities.”

Greenlight also added 100 people to its family of employees during that time, he said.

“We were voted best dispensary in the state of Missouri and we’re always working on how that consumer experience can be better,” the CEO said. “We added kiosks into every location and pick-up windows in the lobby, in case there is a drive-thru back-up.”

The company also implemented drive-thru attendants to accelerate the lines for consumers, he said.

“You can about double your drive-thru output if you know what that consumer wants that is five cars back versus when they pull up to the window,” Mueller said.

EXPANSION PLANS: Greenlight has operations across the Midwest and Southeast including in the states of Missouri, Arkansas, West Virginia, Illinois and South Dakota and the CEO said the company has plans to expand.

“We have five stores in West Virginia today and we’ve got another four that are in the construction process,” he said. “Then if you look at South Dakota, I have got another three that are opening here probably in the next sixty days.”

Greenlight is also opening a Chicago location next month, Mueller said, marking the first store the company will operate in Illinois.

“We are very active in these new markets as well,” he said. “We’re submitting applications in Alabama and then the new licenses in Florida and Texas are coming. We also want to be on the tip of the spear when you look at a state like my home state of Kansas and in North Carolina as they work through the legislative processes.”

INDUSTRY COST CUTS: A number of MSOs have recently announced cost-cutting initiatives including reduced footprints and headcounts in an effort to reduce capital expenditures.

“We are doing the opposite,” the CEO said.  “We have our foot down on the gas pedal, expanding as rapidly as we can. As a profitable, debt-free private company, it is significantly easier for us to expand and be very frugal with our capital.”

He noted operators are implementing measures as equity markets have been crushed waiting for cannabis regulation out of Washington D.C.  “Most of them have a significant debt load that they need to service as they weather the equity markets,” Mueller said. “It is almost impossible to raise equity now and so these cost-cutting measures make sense for any business, whether they’re in cannabis or not.”

ECONOMIC CONCERNS: When asked about how rising concerns around inflation and recession will impact the space, the CEO pointed to sales trends in the alcohol industry, noting sales increase when times get tough.

“I don’t know if we’ll follow that trajectory but I think as more cultivation comes on line, then that cost for the consumer continues to drop across the country,” he said. “It’s just a matter of how quickly and when. You’ll see as the average consumer’s pocketbook tightens, the cost numbers will line up with supply and demand.”

DELIVERY SYSTEMS: As delivery systems for cannabinoids become more diverse and consumers have more options for consumption, Mueller said he does see a difference between product use in the medical market compared to the adult-use market.

“What we have seen in the medical market is you’re somewhere between 60%-65% on flower products and 35%-40% on everything else, including vape, edibles, concentrates, etc.,” he said. “Now what we’ve seen is a shift when we went to adult-use, where you’re getting closer to the Colorado version now, which is about 50% of the further processed items and 50% of your flower and pre-roll products. If you break down that 50% of the concentrate or processed products, still the two 800-pound gorillas are your gummies and your vape.”

LEGALIZATION: Following the mid-term elections, Republicans won control of the House of Representatives while Democrats retained control of the Senate and the CEO said he does expect the results to impact cannabis reform.

“Obviously getting something through Kevin McCarthy is going to be much more challenging than Nancy Pelosi,” he said. “We do have multiple bills with heavy Republican support that came out of the House of Representatives and you question if that is actually going to get a floor vote as they move forward.”

Mueller added Senator Chuck Schumer has also indicated that he is formally bringing a descheduling bill to Congress.

“We wanted to see some descheduling or at least SAFE coming out of the Senate and that never happened,” he said. “We’re hoping that he lives up to that promise and currently, we have someone friendly in the White House. I think if we can get it out of the two chambers, then Biden would be quick to sign.”

The CEO said he is hopeful that some type of cannabis reform is submitted in the summer.

“Quite frankly, it’s crazy that fentanyl is Schedule II and marijuana, which has never seen an overdose, is still at Schedule I,” he said. “We hope we see a rescheduling to move fentanyl up and move cannabis off.”

CHALLENGES: When asked about the largest hurdles facing the cannabis space, Mueller pointed to the need for cannabis reform from Washington.

“There is a fog or a cloud that is hanging over the industry right now just because everyone thought we would be progressing,” he said. “You do see states like Kansas, North Carolina and others that are moving forward. We are going to continue to add states as we are well past the tipping point in my opinion.”

The CEO added industry obstacles are seemingly political as there is a 90% approval rating for medical marijuana among the average consumer.

“As these new states come on like Missouri and Kansas, residents and politicians will be able to see that there is no big bogeyman coming out of the closet when you have cannabis products in consumers’ hands,” he said.

OPPORTUNITIES: As the cannabis sector develops, Mueller said Greenlight is looking to become a dominant player in flyover states.

“We like these new states coming on board with new licensing measures like Alabama and Texas as well as Florida’s program expansion,” he said. “We want to be on the front end of those. We would like to go in and use our resume at being a very good operator in the industry to expand in other markets that are coming on board. We will scale our businesses as efficiently as possible to expand our footprint across the country and stay focused in these new markets.”

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage Holdings (ACRHF), Aleafia Health (ALEAF), Atai Life Sciences (ATAI), Audacious (AUSAF), Aurora Cannabis (ACB), Avant Brands (AVTBF), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Body and Mind (BMMJ), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clever Leaves (CLVR), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos (CRON), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), Flowr Corporation (FLWPF), General Cannabis (CANN), BZAM (BZAMF),Greenlane (GNLN), Green Thumb (GTBIF), Goodness Growth (GDNSF), GrowGeneration (GRWG), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC),  Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), NewLake Capital (NLCP), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN),  Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor (SHFS), SLANG Worldwide (SLGWF), Small Pharma (DMTTF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Trulieve (TCNNF), Verano (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).

Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp, psychedelics, ketamine, psilocybin, LSD, MDMA