Todd Sullivan: Hi, this is Todd Sullivan and welcome to the Cannamedia Podcast. Each week, we will bring you a podcast that covers the cannabis industry. You’ll hear from medical professionals, educators, newsmakers, entrepreneurs and the investors who fund them, in our attempt to bring you a complete view of the cannabis landscape as it continually evolves. We hope you enjoy it.
Todd Sullivan: Right. All right. I’m Todd Sullivan, welcome to the Canamedia’s podcasts and I’m surrounded by founders today. We have Mike Scott, the founder of Cannapreneur Partners and we have John Brady and Bob Carr, the founders of a company called Nature’s Remedy, a vertically-integrated cannabis company in Massachusetts. So welcome gentlemen, and thank you for appearing with us today.
Todd Sullivan: Tell us quickly, a little bit about your history. We’ll start with you John, how did you … your work history and how did you get involved in this space?
John Brady: Well, it’s interesting. I’ve been in ag over 40 years, and so I started out in the cotton business and then matriculated through into, I did seafood. And also, then I got into the agricultural biotech business and I retired. And my son called me one day when I was retired and said, “You know, we got to get into the marijuana business.” And he was an investment banker in Boston. And he said, “I think that’s the future.” And so-
Todd Sullivan: When was this?
John Brady: This was 2012.
Todd Sullivan: Oh, so early?
John Brady: [crosstalk 00:01:20] 2012, and we wanted … We got into the nutrient business he and I, because my biotech business sold agricultural biotech products to the likes of Bayer, Syngenta, people like that. And so, he wanted to license in our biotech technology and sell it to cannabis growers. He said, “I don’t want to get into the growing business. I want to get into the picks and shovels.” That stuff people always need no matter whether the price is up or down.
John Brady: So, I got into it with him. We founded Rx Green Solutions as the fertilizer company, nutrient company. We sold high-tech nutrients and that started in about 2013. And then I built the first RND facility for cannabis in the United States, in Colorado in and about 2015.
Todd Sullivan: Okay. What does that company do?
John Brady: Rx Green Solutions, they sell nutrients.
Todd Sullivan: No, the RND. The first RND company.
John Brady: That was our Rx Green Solutions-
Todd Sullivan: I got you. I got you.
John Brady: … on the RND facility to test nutrients on, how did they grow with cannabis? How much perlite do you need in cocoa? All sorts of things. And we experimented with everything, trying to figure out how this plant grows. And basically, that was in the early days, people were just coming out of their mother’s basements at that point and getting licenses in Colorado to grow our recreational cannabis.
John Brady: And so, we did that. And then I got tired of … I’d retired from my biotech company. I got tired of flying back and forth to Denver every other week and so, I got on the board of a company called Bloomfield Industries in New York, asked me to be on their board and they got a license in New York to … and then they had some financial issues so I sold the company to MedMen.
John Brady: And at that time, at the same time, my son was trying to buy a house and he ran into this guy in New Hampshire that wanted to get into the cannabis business, who was a home builder anyway, and my son didn’t have time to help him. And he said, “Well, why don’t you help him?” Which happened to be Bob Carr, the guy sitting next to me.
Todd Sullivan: That’s so funny.
John Brady: And Bob was driving all over Massachusetts trying to find sites to get into the cannabis business in Massachusetts. And so, I started out helping him and we became partners shortly thereafter and here we are today, quite a few years later, it seems.
Todd Sullivan: All right. So, 2012, what are you doing that you’ve suddenly decided you want to take the plunge in the cannabis space?
Bob Carr: Well, a little bit before that maybe two or three years before that, New Hampshire opened up to the medical cannabis world and they were taking applications. Their application was a little different than Massachusetts in that, theirs was done competitively. So you basically have to write up a competitive application. So, they’re quite lengthy and detailed and everything’s got to be in the application.
Bob Carr: I was with a friend one day … Well, first of all, I was in construction building, developing business for a long time and that’s again how I met John’s son. I got out of that business, wasn’t sure what I wanted to do and was just working on a small project on my own. And a friend of mine mentioned that New Hampshire was opening up this program. So I looked into it, investigated it. I didn’t know anything about the product, don’t partake in the product and just one thing led to another and I started getting some momentum.
Bob Carr: And so, I started putting together a team and put together an application and this was for New Hampshire. And about that time, I think that’s when I connected with Todd, relative to New Hampshire and New Hampshire, it was called, the Nature’s Remedy of New Hampshire. So we did the application, put together what we thought was a great application, really competitive. I’d been in New Hampshire almost my whole life and really thought we had a good chance of getting in. We did not get the nod.
Bob Carr: Massachusetts came around a real short time thereafter, was debating whether I had the gumption to do it all over again because these are quite expensive and you’ve got to basically fund them yourself to get them going. So, I got the gumption to do it again, connected back with Todd and that’s when Todd introduced me to his dad, John. And at that point, as you heard, John has just got a great background. He was just perfect for my restart and the rest was history.
Bob Carr: Him and I together, he was still doing his thing with Bloomfield, I think, closing out some of his other projects when I was just getting going so the timing was right. But a short time thereafter, the both of us are hunting down locations all over Massachusetts, which I think we probably spent a better part of a year, just knocking on doors, talking to real estate owners and looking for a location.
Todd Sullivan: Let’s talk about that process because I don’t think a lot of people understand really what’s involved in finding a location for a cannabis, A, cultivation and B, dispensaries. There’s no database that exists of where to go. How do you find [inaudible 00:07:01] in Kingsborough, in Worcester, in Milford and then obviously you have your Lakeville cultivations-
John Brady: Millbury.
Todd Sullivan: Millbury.
John Brady: Millbury.
Todd Sullivan: Millbury, yeah. Then you have the Lakeville cultivation facility. How do you find those locations? What’s involved in that process?
John Brady: It’s a lot easier today than when Bob and I started. Today there is a list on the CCC website that lists towns that have voted to allow recreational cannabis in there. You have to remember when Bob and I started, it was strictly medical and there was no list. There was nothing. It was just knock on doors and go to town meetings. Bob and I, God, I don’t know. We went to 40 town meetings, at least.
Todd Sullivan: At least. Wow.
John Brady: And they were ready to run us out with pitchforks and torches. We were considered, even for medical back then-
Todd Sullivan: And this is 2012, 2013 timeframe?
John Brady: About 2013. And they were calling us drug dealers. People in the audience were coming for medical, screaming at us. Telling us to leave town, don’t come back.
Todd Sullivan: Wow.
John Brady: It was a whole different world back then. Bob, you can talk about some of these town meetings.
Bob Carr: Yeah. They were tough there. They were Milton in some ways, because people would just … And to think that we’re even talking like that just a few short years ago is amazing, but that’s how quickly this thing has changed. And I think the industry is still … is evolving at the same speed. It’s just going really rapidly. But the difficulty back in the early days is, what you had to do too is, you had to go into each town and look through bylaws, one town at a time and crawl through the bylaws to see what they allowed for cannabis, where they allowed it and what were the requirements.
Bob Carr: So, once you knew the zone that it was allowed in, then you had to go and get the zoning map. And then typically what you had to do to see if there was a piece of property available is you’d make a copy of that zoning map. You’d get in your car, you’d go to that town and you’d start looking at what buildings were there. And you’d start looking for lease signs or something that might be available, or you go knock on a door, or you get the address of it then you go back onto the website and you go into the registry of these and you find the owner of that and you write him a letter and tell him that you’d like to talk to them about leasing or purchasing of the property and what you do and what you’d like to do.
Bob Carr: And that was … Yeah, it’s just so difficult to get in.
Todd Sullivan: What license or what location did you land first? Was it the cultivation? Was it the dispensing locations?
Bob Carr: I think they were probably simultaneous. It was Grafton and Millbury and Grafton was our cultivation and Millbury was going to be our first site. And as well as I think the select board hearings where I think with the same night, one night and John was doing what I was doing, the other and Millbury we got through and I think we may have gotten through either that night or maybe the [crosstalk 00:10:13] thereafter but [crosstalk 00:10:14].
John Brady: No, we didn’t get through on Grafton that night. You got through in Millbury. Grafton was the most militant town-
Bob Carr: Okay, that’s right.
John Brady: … that we went to for, even on medical.
Todd Sullivan: That surprises me.
John Brady: And I think the select board was very easy to work with. The citizens were very vocal, especially a small group that abandoned … This was medical, remind you.
Todd Sullivan: Right.
John Brady: Okay? And so, we finally, I think we had a split decision on Grafton to get it. There was a majority by one that allowed us to go into build a cultivation and a dispensary in Grafton. And I remember walking out to Bob and saying, “We will never, if recreational passes, we will never, ever, ever in my lifetime have recreational and graft.” And in the minute recreational passed in the state, the first town to reach out to us to say, “We’d like you to come back in and talk about-
Bob Carr: It was Grafton.
John Brady: It was Grafton.
Bob Carr: Because they saw the light, but it doesn’t take very … It takes very few people in the audience. All just you need is three people that have a Milton on you-
John Brady: The loudest.
Bob Carr: … and they’re speaking and you actually feel like they’re speaking for the entire time, when they’re indeed not.
Todd Sullivan: Right.
Bob Carr: So, you can say that, the select board or a handful of them, because I think there was a three to two vote in there, but when it came to the adult use, they were all on board by then but that’s just how quickly [crosstalk 00:11:47].
John Brady: They’re an incredible town to work with. They are the nicest people. They are easy to work with. Millbury-
Bob Carr: Basically, at a small local minority-
John Brady: … is the same way. Millbury is, I don’t think we can say enough about the towns. We were in Lakeville, Millbury, Grafton-
Bob Carr: Tyngsborough.
John Brady: Tyngsborough has been phenomenal and Wister has been exceptionally easy. So, we were very fortunate. The towns we’ve worked with are really just so wanting us and doing things to help us get open and started, so we’ve been very fortunate.
Todd Sullivan: So that process took you from you guys meet, you get these first locations, you’re knocking on doors, going to town meetings. What was that? Two years?
John Brady: At least.
Todd Sullivan: Yeah, just two years of ground work just to get your location secure?
Bob Carr: Yeah.
John Brady: It took us from the day-
Todd Sullivan: That’s amazing.
John Brady: I think Bob started six months before I joined him. I would say from the time Bob started, till we were able to open in Lakeville for cultivation, four years.
Bob Carr: Yes. Yeah.
John Brady: Four years.
Todd Sullivan: It’s a battle and a long road. I watched these guys, these guys did some pretty impressive stuff, because when these guys got active, which was years before I met these guys. I started researching the industry in 2016. I met them in, I think it was May of 2017-
John Brady: It was May.
Todd Sullivan: … if I’m correct. And I will tell you, I was excited to get into the industry because of what I had researched. It was explosive. But then I was having a hard time finding my all-stars, finding people to be able to trust and form a partnership with. And when I met these guys, I was like, what? They have track records of success. They had a list of, here’s how we’re going to spend the money. It was really refreshing to see, but what was even more impressive, because when you form a partnership in the early days, you’d taken a risk, but it was more impressive just to see these guys in action with their talons in the building and everything.
Todd Sullivan: Really, really was very fortunate to [crosstalk 00:13:49].
Bob Carr: So many people look at successful entrepreneurs and they see the end result. And you wonder, what percentage of people, I’m guessing 95% or higher would have quit in the first two years? How many people went-
John Brady: Oh, jeez.
Bob Carr: … to town meetings and looked up plot plans and copied this and knocked on door to doors?
John Brady: I couldn’t have done it without Bob, because Bob had the experience of building homes and being a real estate developer in building. So going in and looking at plot plans and everything-
Todd Sullivan: He had that foundation.
John Brady: … he had that.
Todd Sullivan: He did.
John Brady: It’s interesting, Todd, I think the reason this worked so well is we all brought something to the table that the other person didn’t have. If there were two real estate people, they wouldn’t have had the ag experience. They wouldn’t have had the knowledge of it. I would have no way known how to walk into a town and pull plot plans and look at buildings and know where to put it.
Siri: I’m not sure I understand.
John Brady: So, we had that.
Todd Sullivan: Siri.
John Brady: And then Mike, when we met Mike, Mike brought the financing side, the connections to be able to … He was fearless. He just dialed for dollars every day. He was fearless. He would ask anybody-
Mike: Oh, man. The stories around that.
John Brady: … if he saw somebody with a big wad of cash at a grocery store, probably that’s [inaudible 00:14:59].
Mike: Oh, God. Awesome stories I would tell you.
Todd Sullivan: 2012 you get the bug, you’re running around. Five years later, you meet Mike. So how did you guys meet? How did that process involve and obviously a three and you have formed some kind of incredible partnership, given what we have in front of us [inaudible 00:15:26]?
John Brady: Bob just got a call from our attorneys that said, “This guy-
Mike: Yeah, I remember like it was yesterday.
John Brady: … is interviewing people to be his partner in the cannabis space. He has money and he’s looking for people who have business savvy. And Bob called me and we drove down to Vincent Zetterberg’s office and we met Mike, he was getting on the elevator at the time and we just started talking and we went in a room and it was like, there were 10 people before us and 10 people after us and we just happened to come in the only guys with a business plan, financial forecast-
Bob Carr: Insight.
Mike: Yeah, I guess so. In all seriousness, I was frustrated. I was like, “Oh man. I was like I couldn’t find that town though.” It was two things. I was looking for a town, but trust. I just, I got to tell you, by the end of our first meeting, I was like, I just knew. It’s like, you just know. You go on those dates and you know. You go on the dates, “Oh, I’m not going on another one.” But one comment I just want to make, right? Because I got into this in 2016 and then really deployed my own capital and started raising in 2017.
Mike: But these guys, I got to tell you, it takes a lot to jump in the cannabis industry when these guys did because I was putting a lot on the line, in 2016, where this landscape was. I’ve said to Bob, man, I have so much gratitude for Bob having coconut-sized balls to get into this industry because that’s what it takes.
Mike: Because let me just tell you, I thought it was going to be easy to raise investment capital for the business. I was grounded in reality my first month. There’s a lot of people that don’t like cannabis. There’s a lot stigma-
Bob Carr: Back then, yeah.
Mike: against this industry.
Bob Carr: It’s a lot easier today.
Mike: It’s a lot easier now. Oh yeah, yeah. It’s a lot easier now, but these guys, oh my gosh. They deal with a lot to get to where we are today.
John Brady: Bob and I together had written checks for five or 550,000 of our money. I can remember distinctly Bob saying that, “I can’t write another check. We’ve got enough.” And I said, “Okay, I’ll cover the attorney fees every month.” I remember that. It was like 4,000 a month. “Okay. I’ll cover the attorney fees going forward.” And we just had to raise money.
John Brady: And we had our license. We had our applications in with the state and we were what? We had till October to get our first town, where we were going to get zeroed out and just have to start the process again with his dad. And we got down to, it was September before Millbury and Grafton came through. We were 30 days away from being done.
Todd Sullivan: Yeah. I want to touch on that part. Okay. So 2017, the three of you have met. So most people are probably thinking Mike made a few phone calls, raised a couple of million.
Mike: Yeah, right?
Todd Sullivan: You got your permits, got a construction done, opened your doors.
Mike: Right? I wish.
Todd Sullivan: What actually happened?
Mike: What dream world are you in? Are you using the product right now? Right? Honestly, I’ve been active in three different industries now: finance, fitness and cannabis. The difficulty, the level of difficulty, emotional strain in this industry is 10X, but the reward is two but man, I’ll tell you, most people can’t deal with that difficulty. It really takes tenacity and emotional intelligence to break through this industry. Really.
John Brady: And it takes talents.
Mike: I think it does. We’ve always said without one piece of this puzzle, this wouldn’t work. It was incredibly fortunate that Bob had all the real estate experience so that he could plow through and find the right zoning into towns to go through. A lot of it was hit or miss back then. I had the agricultural experience, but I also ran a public company so when it came to making presentations, putting together professional materials, I ran a public company for 12. I was the CEO of a publicly-traded company so I knew what investors look for and I knew that we had a budget to … We had to have forecasts.
Mike: And Mike just was fearless in raising money and he ran around with managing high net worth individuals’ money. So, without any one of those pieces, it wouldn’t have worked. And that’s the difficulty most people face is, you’ve got to be able to know your way around the town halls and land. You’ve got to be able to be professional when you walk into the town.
Mike: To me, many people before us were getting high in their car before they would go to make presentations and we’d see them and they’d come in and they’d reek of marijuana and they’d walk in and they’d stand up there in gym shorts and a grateful dad t-shirt and make a presentation why the town want to let them in there. And we come in in suits, have a very professional presentation and we had money behind us.
Mike: And so, getting the towns together, we had, I felt an advantage, but then it’s the capital. We went into this thinking we needed $11 million. I think we’re well over 20 into this today. Who has the ability, that doesn’t have this experience to go raise 11 mil, that’s $20 million? You have to be able to make that presentation. On top of that, Bob would … Who has a staying power, Bob? We’ve locked up sites, retail sites for what? Two years that we had to pay rent for?
Bob Carr: Right. No, in the beginning days it was, not only did you have to find the property, but you had to have the right type of property on a landlord or a landowner that would hang around long enough for you to do what you have to do, knowing that it wouldn’t even matter if you’re doing 7-Eleven or a Burger King, it’s going to take a year but with the cannabis thrown on top, it’s two years.
Bob Carr: So you’ve got to be able to … And at that point, with funding just getting going, or wasn’t even funded at that point, you’ve got to be able to hang on and all of these and establishing those pieces of property, the Millbury, the Grafton and then once we got going our other locations that we tied up. We tied up a location in Raleigh and Tyngsborough. And yeah, you’d pay on those for … And then we’re in Wister and you’ve got to pay on those for two or three years before you can even get to them.
Bob Carr: And the other thing, I think I showed a spreadsheet to Mike at one point how long we’d been paying into the medical program for our fees and it was to the tune of a half a million dollars-
Todd Sullivan: Yeah, wow.
Mike: For fees of a license that we don’t even have today, that the adult use just ran away with everything and medical debt left behind, which is so discouraging because that was the reason we are here in the first place was because for medical patients really and that was our pitch of the town. So, listen, we’re not here just as high rollers, businessmen, we’re here because there’s a purpose behind what we do.
Todd Sullivan: Right.
Mike: So I think that’s the other part of this story. Certainly, maybe you can maybe get into that a little bit.
Todd Sullivan: Yeah. Go for it. So yeah, I think you got into the medical space for a reason, right?
Bob Carr: Right.
Todd Sullivan: You weren’t selling pot for people to party with. You got into this, obviously with a purpose, right?
Bob Carr: Right.
Todd Sullivan: Tell us about that.
Bob Carr: I’ll let John, maybe somehow, he can-
John Brady: Well, we had different reasons, but we firmly believed in the medical program, that this was a thing that could help people, that prior, my wife passed away from cancer. And I can remember some of her friends wanting to bring it by, even though it was illegal to help because she was nauseous and had lots of problems from the chemotherapy. And my wife would say, “No, no, no, it’s illegal. It’s illegal.”
John Brady: And the thought, and I watched her suffer after all these chemo treatments and things and Bob came and he was very passionate about the medical program and Mike was too. And then we hired our first employee was our CFO, Stuart Bernstein, who is still to this day a massive believer that, this medical cannabis should be emphasized more in the state of Massachusetts.
John Brady: And so we were all believers in it and when we went to the towns, I think it was that passion for helping people and providing a product that take it out of the stigma, that dark ages that this helps people was the passion we brought forward I think what the towns felt, that we’re not here just to get our foot in the door and go into the recreational business.
John Brady: But once the state passed recreational, they don’t get any tax revenue from medical at all. And they’re getting 20% from REC. They all been abandoned handing out medical licenses. We were approved by an inspector November 11, 2018, to open our cultivation for medical. We just needed a letter from the state. And at that time, they were merging the medical program with the adult use program.
John Brady: So that is November 11th, 2018. In January of 2020, we received our letter.
Todd Sullivan: That’s a quick 14 months later.
John Brady: Right.
Todd Sullivan: Unless you got me a retirement chair.
John Brady: Back to your question, I think the thing that’s most interesting is you wake up one day, you want to get into business, you’ve spiraled an application, you find the site and you’re open. If you were to get into this business today, people ask me all the time, you have dinner parties and things, and they say, “I want to get in the marijuana business. What do I need to do?”
John Brady: And I’d say, “Well, if you want to have a dispensary, you got to have a million dollars in your pocket to start and if you wanted cultivation, you got to have 10. It’s just, that’s a fact of life because it will take you, if you were to find a town, be so lucky to find a town that would allow you to put a dispensary in, by the time you go through all the zoning and everything in the town, you then file your application with the state and then you receive permission and you get to open.
John Brady: You’re probably two years away if you were to start today. I’m I?
Bob Carr: No, you’re very close. Yeah, no. No, don’t give up your day job.
John Brady: Two years from start to finish, for a simple dispensary. Cultivation is probably eight to 10 million and it’s probably two years till you get to open and then you got another six months of getting your crop out of the ground-
Bob Carr: Harvested.
John Brady: … harvested, planted, popping seeds, get everything straight.
Bob Carr: So, everything goes while you’re looking at two and a half years. If there’s any delays, you could be up to three, three and a half years.
John Brady: Probably two and a half is a good number, but you’re laying out money all that time on that.
Bob Carr: All right. So, now let’s flash forward. We got our doors open where we’re starting to crank. We’re getting going. The cultivation in Lakeville is producing product. You’re selling it in Millbury.
Todd Sullivan: In wholesale.
Bob Carr: Whole-selling it. Sales are rising. COVID hits, Governor Baker. The dirty word in the cannabis business.
John Brady: Yeah, cannabis business. Yeah. It’s painful. A lot of layoffs. Morale pretty much plummets with who you keep on because you got to keep on staff just on our cultivation. Retail, we laid everybody off. So, all 35 people got their walking papers. These are the people that we trained. We also paid their fees to become licensed. They’re all laid off and so-
Todd Sullivan: And that’s just not Nature’s Remedy-specific. That’s statewide.
John Brady: It’s statewide.
Todd Sullivan: Every recreational sanctuary was closes so all of these workers lost their jobs.
Bob Carr: Yes.
John Brady: Yep. And it’s unfortunate. We’re the only state in the country where that’s the case that has adult use and a lot of the cannabis industries, the speculation is that Baker’s just pretty anti-cannabis, right? I think it’s kind of obvious [inaudible 00:27:54].
Todd Sullivan: Yeah. It’s hard to clean them out when you’re doing something like that. So all these businesses got shut, for however long it’s going to be, employees got laid off, cannabis business, the government has the big aid programs, you’re not eligible. Are they employees [inaudible 00:28:10] for anything?
John Brady: There is a movement in Congress right now. I think 20 Congress house members have signed on to a bill. They’re trying to tack it on to the next level of monies that are laid out, that they’ve included it as a writer on that bill, that they are eligible for the PPP program and a Payroll Protection Program. And so, we’ll see what happens there but no, as Bob said, we’ve probably laid off 65, 70 people … approximately 65 to 70 people.
John Brady: The good news for them is that they are making as much, or maybe a little more than they were working for us because of that $600 a week the government puts in yeah. That’s for 13 weeks. But yeah, it’s-
Todd Sullivan: And they’re going to have to pay taxes on at the end of the year, right?
John Brady: Right, but they pay tax on any money that they get. But it was a knife in the heart of ours for more reasons. We were just getting started. We were rolling. Thank God for us, we have money in the bank. We have been judicious with our cash. We have incredible investors that are willing to put more money in, because they still believe in us and we have a great landlord and lenders that are all willing to work with us, but that’s not everybody in this industry, right?
John Brady: This is going to be a great deal of pain. Go ahead Mike, sorry.
Mike: Talk about just the timing of it, right? It’s just, imagine the road that we’ve been on for years to raise the money, to get open, our first doors open, we were like a week, maybe two weeks away from our second cash machine being open and this hits. It was like, imagine going through an MMA fight and you’re ready for the judge just to say if you won or not, and be like, you got another one, here’s your next fight right there.
Mike: That’s what it was like. I was like, “Are you kidding me. What?”
John Brady: Our inspection in Tyngsborough was canceled the day of the inspection. The inspector was due to show up in Tyngsborough to give us a commence operation inspection and we got a call that morning or late the night before that the inspection was canceled.
Todd Sullivan: Because of the shutdown.
John Brady: Because of the shutdown.
Todd Sullivan: It wasn’t the first empowerment applicant in Boston opened his doors?
John Brady: For about two weeks.
Todd Sullivan: Two weeks and got shut down, right?
John Brady: I know people-
Todd Sullivan: Who knows if he’s going to be able to make it, right?
John Brady: I know people that were ready to open a manufacturing operation, had orders for their edibles and they closed. The order came in that weekend and Monday they were due to ship and weren’t able to ship.
Todd Sullivan: And I think it’s important to point out to people that Baker has ruled cannabis as essential. It’s not like he thinks cannabis isn’t essential. He recognizes it is, he just pick and chose the winners and losers in this, right? He kept the medical program open, which is understaffed, under-supplied and closer to recreation or the adult use.
John Brady: I’m not so sure that medical is not under-supplied in a flower and maybe edibles there. Now they’re working through their inventory and we are getting calls as of yesterday about some medical companies that were looking for wholesale flowers.
Todd Sullivan: Oh, yeah.
John Brady: So we’re starting to see some of that open up, but at the end of the day, that’s really about 10 to 50% of sales for those companies. The bulk of it was adult use. No, it’s incredibly difficult right now. It’s difficult for a lot of people. Think of restaurant owners in Boston and all that, where Walsh is saying that the restaurants and the bars can open.
John Brady: Its not just us, but we’re not eligible for the PPP, which is-
Todd Sullivan: That’s a big difference.
John Brady: … that’s a major difficulty. Everybody else is, we aren’t and that’s where we suffer more.
Bob Carr: Disproportionately.
John Brady: Yes, because of that.
Bob Carr: That just this program, they created an industry and it’s a big industry and it takes a lot to move that industry and it was a slow-moving [crosstalk 00:32:06].
John Brady: Iceberg.
Bob Carr: Right. And they got it moving and that’s just been … It’s been stopped cold and so, to Mike’s point, to get that going again is going to be a real challenge for companies out there, companies like us trying to get … Getting the ball moving again, getting the wheels back on the bus. Yeah, it’s just going to be hard. It’s going to be another mountain to climb. It’s not going to be simple and easy.
Mike: It really doesn’t make sense. The states killing their own tax position. You know what I mean?
Bob Carr: Yeah.
Mike: I think Nathaniel and our team had calculated the rough estimate, the tax loss due to this and it doesn’t make any sense.
Bob Carr: What did you calculate it at Nate?
Nate: I don’t quite remember, but it somewhere in the $3 million range a month.
Bob Carr: A month.
Nate: Oh no. You’re way low. It’s $9.2 million a month.
Bob Carr: So, you were calculating each week then?
Nate: I might have been each week.
Mike: Yeah. It’s 9.2 million roughly-
Bob Carr: Tax revenue.
Mike: … tax revenue that is not going to the state or local community.
Todd Sullivan: So on essential business, for essential business?
Mike: Yeah. It’s definitely at least 9 million a month.
Todd Sullivan: What do you think … So they extended it to May 18th, what do you think is the fallout … What’s the fallout going to be on the adult-use industry? Do you think we’re going to see 15 dispensaries, wherever they’re already just going to be 10 when we come back? Are just people going to go under? Are cultivation sign going to go under?
John Brady: Hard to tell. The cultivations were fairly well-capitalized. The biggest issue that we face is … And the good news in all of this is they allowed us to continue to cultivate and keep our plants alive. So, that we weren’t allowed to plant new plants, but we could keep our plants alive. So a lot of us have built up a very substantial inventory.
John Brady: Obviously it’s not cash.
Todd Sullivan: Right.
Mike: We need cash. You can’t pay your bills with an ounce … Come, drop a couple ounces off at the power company, that’s not going to happen. So, our inventory, we can’t borrow … but just think, a normal business could borrow against their inventory. If you’re making widgets, if you’re making chocolate cookies, whatever, you have a bank that’s going to lend you against your inventory because they know eventually if it’s not a perishable inventory, you’re going to be able to sell it.
Mike: So, we can’t borrow against our inventory, because we have no banking lending available to us.
Todd Sullivan: And that’s not Nature’s Remedy, that’s an industry problem.
Mike: That’s the industry.
Todd Sullivan: That’s an interesting problem.
Mike: So we’re sitting there, we’re all harvesting crops that God, we’re building an inventory. But there are a lot of people that were halfway through building, let’s put us aside. Those of us who were open. You have a lot of people that were building out there, building cultivation sites, building dispensaries. And think of the ripple effect. It’s, if you’re halfway through building a cultivation and you get shut down with coronavirus, your investor community, the money has dried up in this industry-
Todd Sullivan: Oh, yeah.
Mike: … except for people who are open. Anybody who’s not open and all the uncertainty, investors hate uncertainty in all of the major multi-state operators, stock prices are 10% of what they were. All of that money, it just watches this industry that has imploded on a public level. Regionally, a lot of people are doing okay, but at a multi-state level, all those public companies have created their stock price, that sends to shut their wallets and say, “Wait a minute, I am not going to invest.”
Mike: So, a lot of people that were building along the way are waiting for their licenses or whatever that had, investor commitments, I know of three that the commitments have just been [inaudible 00:35:51].
Todd Sullivan: It’s gone, yeah.
Mike: So, it’s hard to say of the 40 of us who were open, will everyone reopen? I would venture to say probably yes.
Todd Sullivan: Well, that’s good enough.
Mike: Is that we will open. Some of them shut down prior to being actually forced to close. Don’t know what their stories are, but I would venture to say, almost all the dispensaries would open, because they can start to generate revenue very quickly, but I just think what’s behind us that has really just come to a screeching halt.
Todd Sullivan: Let’s flash forward. COVID ends, it’s middle of June. People are going back to work. Your staff’s coming back. Hopefully everyone comes back and hasn’t been forced to find alternative employment in the meantime. I’ve been to your location in Lakeville, state-of-the-art facility. Probably the nicest, definitely East of Colorado, if not in the entire US. Three dispensaries, two will be up and running as soon as possible after the break’s over.
Todd Sullivan: What do you think the industry looks like in mass at that point? What do see for Nature’s Remedy?
Bob Carr: Well, first, I see for Nature’s Remedy I think our third location is probably, at least, I don’t know, maybe nine months away. That’s in Wister.
Todd Sullivan: Mexico on the Island.
Bob Carr: Yep. And we’re really excited about that location but our CCC approvals are in place to keep that moving along in the approval process so that’s exciting. And Tyngsborough, we’re really excited about it. It’s a new standalone building.
Todd Sullivan: Where’s that location in Tyngsborough? It’s right on that main shopping route, is that?
Bob Carr: Yes. It’s a 420 Middlesex road. And that address was just by chance but by serendipity. It is 420.
Todd Sullivan: That’s awesome.
Bob Carr: It is, it’s amazing.
Todd Sullivan: The work that ended a little though.
Bob Carr: I wasn’t even thinking of it until actually the building inspector looked at me and he laughed one day. He said, “How did you ever get this?” And I’m like, “Oh, wow. Yeah, you’re right. That’s- “
Todd Sullivan: That is amazing.
Bob Carr: Right. Yeah, we’re excited about that, but it’s in a good location. We’re able to give ourselves ample parking. And what’s great about building from the ground up, you build it the way you … You build it around traffic, you build it around how you’re going to greet people at the point of sale, as opposed to, if you’re an existing building, you have to work within the confines of an existing building and you have to build it with other tenants in mind.
Bob Carr: But when you’re standalone, it’s great. It’s the same thing with our Millbury site. There, we built identical buildings and just being in control of your own site. And the police departments will tell you that it’s a much better way to go as well. We’re able to camera the entire property all around us security-wise. It makes for a much safer building as well.
Bob Carr: So as far as where we see us businesswise, it’s hard to tell.
Todd Sullivan: Do you see the industry adapting different ways of getting product to people, the curbside delivery, is that going to become a standard thing, or delivery, is that going to increase, or do you think the business starts maybe planning for … Not [inaudible 00:39:18] business term, but the industries that’s planning for, like, this may be the way we handle these things in the future, so maybe we have to be prepared for a three or four or five-weeks shutdown every now and then.
Bob Carr: Right, right. I agree. I think the world is going to look different. Never mind that our retail space and how we greet people at the point of sale and certainly curbside deliveries are going to be something, I’m quite certain that the commission will be looking at. I have heard that speaking of home deliveries for adult use, it’s currently allowed for medical.
Bob Carr: So those, they’ll be doing anything they can to continue some of the things that are in place now for social distancing and [inaudible 00:40:06] the change.
Todd Sullivan: I think in some ways you might look back to this in retrospect and there may be some positives that come out of it. If the industry can adapt to be a less person contact-intensive thing, the governor’s rationale for shutting it down kind of evaporates. And so, hopefully if this happens again, we avoid a wreck adult-use shutdown, because we’ve adapted guidelines that’ll eliminate a lot of the issues he was concerned about.
John Brady: What we’ve seen though and I think we saw that the weeks before we actually closed was, we have what’s called our Leafly, is you order online ahead of time and then you can just pick up. So, you just walk in and we were practicing social distancing, keeping people six feet apart. There were lines, but the turnaround time was two to three minutes. You would just walk in-
Todd Sullivan: Which is amazing in the cannabis space.
John Brady: … and your order was already pulled for you. You’d walk in and your order was waiting for you. We’d have anywhere from two to 500 orders in the vault ready to go. And people would just walk in and say, “Todd and Anderson,” or whatever, and here it is, and off you go out the door. So, I think we’re going to see a lot more of that. I think Bob’s right, so home delivery.
John Brady: Now, they’ve limited as to who can deliver the delivery services that you can use. They’ve awarded two so we’re going to start to see home delivery for adult use fairly soon.
Todd Sullivan: Where?
John Brady: Throughout the state, these are just delivery companies.
Todd Sullivan: Oh, okay.
John Brady: And so, their-
Todd Sullivan: So it’s not like the sponge and that’s town-specific. With a delivery license, you can-
John Brady: No, you can. So, I think in many ways you’re going to open up the whole state, whereas before, you really wanted a downtown Boston location because of the traffic-like [inaudible 00:41:49] does an enormous business in Brookline that we all know. But if all of a sudden you go to home delivery. You start to break down geographic boundaries. There’s no reason that you have to be in maybe densely populated areas, that you’re able to just have a delivery service that you’re on the perimeter and you deliver it.
John Brady: I think this will expedite and accelerate the awarding of these home delivery licenses. I’m hoping. And that allows people to sell the best products to people, versus geographic location. There will always be people who want to come into a store and look at the different products and everything but I think Bob’s right. Home delivery is going to be big. Leafly order, preorder is going to be, I think, much larger post-Corona.
John Brady: This is going to change the way everybody lives their life.
Todd Sullivan: Yeah, I think so. I think you’re right.
John Brady: Not just for cannabis, but everybody.
Todd Sullivan: So, what do you see about-
Mike: Okay, great. I was going to say, for delivery, am I correct in thinking that they gave pharma candidates a year-
Todd Sullivan: In pharma candidates have now a year to two-year head start, yes.
Mike: Yeah. That’s a big leverage point for them.
Todd Sullivan: So Mike, what do you see in the funding space? At the fundraising space in cannabis, post-COVID?
Mike: I think it was a challenge prior because the canvas public markets had fallen apart over the last year and a half or so. Look, it’s not impossible. In fact, we’re putting in a lot of efforts, we’re doubling down on raising and building our fundraised team. And what I’ll tell you is, it’s going to just take that much more activity, right? So, what I’ve said to the team and the people that we’re recruiting is, if there’s ever a time now where being able to land capital in this industry is important, it’s 10 times more important now.
Mike: It might mean we might have to make 10 times the number of dials or contacts or networking events, or be smarter about how we market, but I’m not going to give up on it. What I know is, somebody here in the East coast is going to be the best at getting investment capital into cannabis businesses and I think we’ve got a good three, four-year head start on it.
Mike: We’re not going to quit. We just recruited a guy from California that’s raised $40 million in cannabis. I’m excited about that because there’s not a lot of groups that have done that.
Todd Sullivan: Like 400 million in other businesses.
Mike: Yeah, I talked to another person today and we think combined with all of us will be like $90 million in cannabis raise. There’s not a lot of groups that can say they’ve done that. So, my outlook is, it’s going to be harder. It’s going to be more the opportunistic investors that are looking now, right? So, it’s going to be investors that they were either prepared for this and they had liquidity on the side or it’s investors that have the stomach for it.
Mike: Yeah. My portfolio took a 30% hit, but you know what? I still have a percentage that’s high-risk speculative. I’m going to move from these types of high-risk oil investments or whatever to cannabis because I think this is a better bet. So, we can still be landed. It’s just going to be a lot harder, but I’m kind of one of those weird guys that likes a crazy challenge, or else, why the hell would I have gotten into this crazy industry? You know what I mean?
Mike: So that’s what I think. I think it’s going to be a challenge. My prediction is, we’re going to have very volatile markets. I can’t see this not turning into an eventual bear market, but I think that we haven’t even begun to figure out the ripple to our economic system that has started with this whole COVID thing.
Todd Sullivan: That’s going to take a year or so to figure that out. But then everything goes well. Okay, so Nature’s Remedy, massive expansion going on at your cultivation facility. It’s going to bring you up to 40,000 square feet of double-stacked rooms. What’s your production going to be annually? What are you looking at?
John Brady: We’re looking at, when we finish, we’ll be double-stacked in 11 rooms. We’ll have a flowering capacity of about 34,000 square feet of flowering canopy and then we have the associated, vegetative and mother rooms as well as the publication rooms. Our goal is to produce about 20,000 pounds a year. We’ve made some great alliances in the industry of people that are looking for long-term suppliers in the end so we have very good relationships with people like that, that we can provide … We make high quality products.
John Brady: And so, we see nothing but opportunities. Obviously, we got into this business and some people may think we’re blinded by it, but the facility that we’ve built, that Bob has built, really, Bob has been the construction guy on site, we’re going to be very low-cost producers. Some would probably the lowest cost producers in the United States.
John Brady: We’re off the grid. We’re using natural gas fire generators. Our generation of electricity is about 50% of what you would pay on the grid.
Todd Sullivan: Wow.
John Brady: We’ve gone to state-of-the-art LED lights. So low energy lights that air about 660 Watts per … But however, because of the efficiency, we only need to run them at about 80%. So, we’re sitting here with natural gas fire generated electricity, where our heating and cooling is generated from the heat of the generators and absorbers that convert the heat to cooling. So, everything we have is eco-friendly, but also very, very low cost to generate.
John Brady: So, we think we can produce a pound of marijuana, well below $500 a pound when we get everything up and running. Colorado right now is selling wholesale for 1200, 1300 a pound. So, whereas most people can’t afford, we’ll be out of business at that level. We’ll still make a reasonable profit. So, for us, everything we’ve done, all that money we’ve spent has been to make us one of the low-cost producers in the United States.
Todd Sullivan: You also have your own line of edibles, the pasta-free brand, right?
John Brady: Right.
Todd Sullivan: And correct me if I’m wrong, but you are the distributor for the AiroPro pens, which is the number brand of vape pens.
John Brady: We have exclusive brands. Yeah, it’s one of the top vape pens in the United States. It’s a very unique technology. And we have the exclusive right for Massachusetts. I also was one of the guys on the ground floor when that got started so I’m more of the part owners of it. So yeah, we feel, we see nothing but good things ahead. There’s a lot of challenges every day when you’re growing that many plants. Every one has its own unique personality.
John Brady: It’s, think of raising 20,000 teenagers. That’s about what you have in there. They all have a personality. They all know what they’re going to do. They absorb water, nutrients, light, everything differently. So, we’re all figuring it out. We popped a lot of seeds. Our pheno hunt’s coming to an end. We’ve got 59 varieties in there right now.
Todd Sullivan: Wow.
John Brady: We were going to settle on probably about 30 that are going to be our winners. So, we see a lot of opportunity in the industry. Like Mike said, I think you’re just going to see a lot of opportunities with the funding drying up. There are good businesses out there you just have to know how to run it. This is a business. I think the thing that, where people mistake it is, they think you just opened a store and you sell a lot of marijuana and you make a lot of money.
John Brady: This is a business. This is just, you could be selling widgets. It really is no different. You just have to know what you’re doing. You have to keep your costs under control. And because times, like in Colorado, Oregon, Washington, all the prices have come way down. The guys that are going to survive are people who know how to run a business on good margins, tight margins and Massachusetts will be there.
John Brady: And we think we have a team that we’ve assembled, that know how to run a business.
Todd Sullivan: Yup. So, for those people who are out there listening who want to be a part of this, does Nature’s Remedy have any funding available? Are you guys raising moneys? Does anyone in the asset have a chance to invest in this operation?
John Brady: We’re always raising money to keep the expansion going. This thing, it’s like a black hole. And so, yes, we’re always raising money too, because there’s always something else we’d like to do to drive our costs down. Anything that we can to drive the costs down and our yields up, it’s an exponentially great return for us.
Todd Sullivan: Perfect. Alright. Well, I think that’s a good place to leave off. Thank you very much. Bob, John and Mike, the threesome that started Nature’s Remedy in Massachusetts and good luck to all of you.
John Brady: Thank you very much.
Bob Carr: Very good, [crosstalk 00:50:40].
Todd Sullivan: You’re welcome but I’ve bitten off. But it’s fun? It really is. Thank you for listening. We’d like to thank our sponsor Cannapreneur Partners for making this podcast possible. If you leave us a good review, it would be appreciated. Each five star review us to bring you the highest quality content we can find. Cannapreneur Partners, the host and any guests on the program may or may not have, or make investments in any of the companies we feature.
Todd Sullivan: If you’re interested in making investment, please check with your financial advisor. If you have any questions, want to appear in the podcast or just sponsor one or more episodes, simply send an email to info@canna-media.org. Until our next episode, we all here hope you have a very happy and safe day. Thank you.
