The cannabis CEO behind a $2.1 billion sale bets again, but smaller

This is part of a regular series of MJBizDaily interviews with major THC industry players. To be considered for an interview, contact editorial@mjbizdaily.com.

Jason Vedadi built one of the largest cannabis companies in the United States, then sold it.

Now he’s building again, leaner.

Vedadi founded Arizona-based marijuana multistate operator Harvest Health & Recreation in 2011. A decade later, he engineered its $2.1 billion sale to Florida-based Trulieve Cannabis Corp., a deal that ranked among the biggest in cannabis history.

Today, he’s the CEO of privately held Story Cannabis. Headquarted in Phoenix, Story employs 800 people and holds adult-use and medical cannabis licenses across five states – two of them MMJ-only. He’s betting on markets where he can turn a profit rather than plant a flag in every state.

He got his start in Washington state, which legalized early. A family member had restless leg syndrome, and his father had a science background, so the family built a legal grow.

“This second prohibition seemed like a once-in-a-lifetime opportunity, so I just kind of ran with it,” Vedadi said of his 17 years in the legal marijuana industry.

How has the cannabis market changed since the boom times?

Story Cannabis is taking a narrower approach than Harvest, which operated in far more states than Vedadi intends to enter this time around.

“In 2017, 2018, you were more rewarded on footprint because markets were more immature,” he said. “Operators have gotten better, but in certain states it’s much more difficult to turn a profit in than others.”

Story Cannabis operates in Arizona, Maryland, Ohio, Georgia and Louisiana.

• Arizona, recreational since 2020, is steady with modest growth.
• Maryland caps ownership at four stores, limiting consolidation.
• Ohio has posted robust growth over the past six months.
• Louisiana is expected to expand.

The company will open new stores in Arizona and Ohio in the next 60 days, but it’s Georgia that stands out as an opportunity for expansion.

The state recently shifted from a restrictive low-THC oil program to a more traditional medical cannabis market with flower and vapes, lifting its 5% THC cap and expanding the list of qualifying debilitating conditions.

Also making Georgia attractive are its 11 million residents, who are served by a limited number of operators.

What’s Story’s growth strategy?

Vedadi wants to be early in emerging markets – whether they’re adult-use, medical-only or still under prohibition. He’s tracking Texas, Virginia and North Carolina and prefers to win licenses through competitive applications rather than buy in.

“We’re trying to be in at the inception of markets,” he said.

Vedadi says Story Cannabis is “(i)n line to potentially get a Texas license” as part of that state’s medical marijuana expansion. Now that Virginia has legalized adult-use cannabis, Story is also monitoring an upcoming licensing round, anticipated for February.

North Carolina, he said, has been “teeter-tottering” on a program but still doesn’t have legal non-tribal cannabis access.

Arizona is the exception to the competitive-application strategy. Story Cannabis will keep acquiring there.

“We’ve been in the market since 2011, so for us, it’s the easiest market to understand,” Vedadi said.

He’s also clear-eyed about price compression, saying that every market eventually becomes oversupplied before finding equilibrium – just like any other commodity.

“To manage your business thinking that wholesale prices will stay where they are forever is foolish,” he said. “If you forecast for it, and you’re prepared for it, you should be OK.”

What’s the next chapter for Story?

Now that medical cannabis is a Schedule 3 drug, Story Cannabis has applied for registration with the U.S. Drug Enforcement Administration for its MMJ permits in Arizona, Georgia, Maryland and Ohio. But he’s waiting on more clarity on  before making broader moves.

Lingering uncertainty regarding adult-use cannabis’ status under federal law has left much of the industry in a holding pattern.

“We’re sitting in limbo with whether the entire plant gets rescheduled,” he said.

Even so, he said Story Cannabis is not under pressure to move prematurely.

“Private companies are in a little more of a rush. We’re more prepared and not in an arms race here,” he said.

That flexibility comes partly from the company’s access to capital. Vedadi said Story benefits from significant equity from its original ownership group, a deep investor base and a track record that helps reduce borrowing costs.

“We’re less of a credit risk,” he said. “We have a history of success, so it’s an easier avenue for capital.”

Will the Trump administration reschedule marijuana?

Vedadi expects marijuana rescheduling to reshape the industry in a major way if the Trump administration reschedules all cannabis. And that’s what he expects.

“DEA is in control of the situation,” he said. “Trump has given a mandate, and medical is already rescheduled.”

After adult-use marijuana rescheduling Vedadi predicts a wave of mega-mergers. Larger public companies would consolidate first, then roll up smaller operators.

License caps will determine which states are the most attractive markets to enter.

He noted a structural problem for smaller businesses: Most entrepreneurs want to build and sell, but some states – like Maryland with its license cap – are so restrictive that buyers don’t exist.

“In some states, there are license cap issues where you can’t consolidate past a certain number of stores,” he said.

Rescheduling adult-use marijuana could also open the door for more companies to uplist to the New York Stock Exchange.

“You’ll see everybody go to the NYSE if they’re eligible, “ said Vedadi, noting that Story will remain private at this time. “In every industry, the cream rises to the top. Over time, you’ll see a small percentage operate better.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.