The operational sophistication of the licensed industry players is a key metric for investors with a longer view, who see large multi-national tobacco, pharmacy and other Forbes “Global 2000” types acquiring the top cannabis brands when (and if) the federal law changes and marijuana is legal.
IDPE is a Washington, D.C.-based single-family office in the process of closing cannabis investments that it expects will produce significant cash flow in the short term, while preparing for the potential of greater returns when larger players are expected to enter the market through acquisition. “Ultimately, the real key is ‘who are the operators’,” says Brad Love, a senior advisor to IDPE. “The team that’s following the best practices will be prepared for the future. We don’t want CVS to come to our place and think we’re a rinky-dink mom-and-pop operation."
That philosophy is paying off for licensed operators such as Chicago-based Verano, which recently announced $120 million in financing, including an $88 million equity investment by Toronto-based Scythian Biosciences Corp. (Scythian has since been renamed SOL Global Investments Corp.) That investment is significant, in part because Canada is establishing the blueprint for the financial structure of a legal cannabis industry.
“We’re building our business to be one of the best in the country,” says George Archos, Verano’s chairman and CEO. In describing his company, Mr. Archos emphasizes its focus on business fundamentals, including the medicinal value and quality of the product, the strength of the team and a focus on operational efficiencies.