Medicine Man Technologies looks beyond Colorado after nearly $300M buying spree

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Medicine Man Technologies, Medicine Man Technologies looks beyond Colorado after nearly $300M buying spree

Andy Williams, left, and brother Pete show off the original $150,000 check - given to them by stepfather Lou Zeman, center, and their mother, Michelle - that led to the formation of their Denver cannabis company. (Photo courtesy of Andy Williams)

Medicine Man Technologies is undergoing a growth spurt of historic proportions, including visions for national and even international expansion that are a long way from the company’s humble beginnings.

At the beginning of this year, the Denver-based company was largely a cannabis consulting company with annual revenues of less than $10 million.

Now, after an almost $300 million buying spree over the past several months, Medicine Man Technologies is looking at pro-forma 2019 revenues of $170 million and possible out-of-state expansion after more than a dozen acquisitions – nearly all of them Colorado companies.

The metamorphosis has come about thanks to a few factors:

  • A team of cannabis industry pioneers who make up the newly merged company.
  • A recent change in Colorado cannabis law.
  • A key $18.2 million investment and some savvy advice from the founder of a Florida-based private equity firm.

Medicine Man Technologies, in short, is positioning itself as a significant vertically integrated operator – a far cry from a decade ago, when the business was launched with a $150,000 loan from the founders’ mother and stepfather.

The acquisitions, 14 in all, range from Denver-based cannabis research company MedPharm and Starbuds dispensaries to large Pueblo-based outdoor grower Los Sueños and dispensary group Colorado Harvest.

All the transactions are due to close between March and June of next year. That estimate stems from the finalization of a new Colorado law that takes effect Nov. 1. The law allows public companies to acquire licensed businesses as well as out-of-state money to potentially flood in.

Once the acquisitions close, Medicine Man Technologies – which trades on the over-the-counter markets as MDCL, will look elsewhere, CEO Andy Williams, told Marijuana Business Daily.

“We are laser-focused on getting these acquisitions closed and getting integration underway,” he said. “Then we will begin to look outside the state, expanding our footprint in all verticals in the cannabis space.”

Williams declined to say which states the company is targeting.

Humble beginnings, big ideas

The current form and outlook of Medicine Man Technologies is a far cry from its modest beginnings 10 years ago.

Williams’ mother, Michelle, had just remarried and was enjoying newlywed bliss in 2009 when her son dropped a couple of bombshells.

Williams told his mother that her other son, Pete, smoked marijuana and grew it at home as a caregiver. Williams then asked his mother to lend the brothers $150,000 to start a cannabis business.

After raised eyebrows, Michelle chatted with her new husband, Lou Zeman, a businessman. He liked the numbers behind Andy and Pete’s plan. And Medicine Man, as the original company, was born.

Once the acquisitions are completed, Medicine Man Technologies will have 12 cultivators, seven processors and 33 dispensaries. The total acquisition cost for all 14 businesses is estimated at $286 million.

Nearly all the acquisitions involve Colorado companies. One purchase features Colombia-based Green Equity, which operates a 271-acre cannabis farm outside Bogotá.

Plan a long time in the making

Such an expansion of Medicine Man Technologies had been in the works since about 2015. Three years later, the company faced a major hurdle after the unexpected death of then-CEO Brett Roper.

Roper’s death was more an emotional setback than one waylaying any strategic intentions. Roper, who had already voiced his intention to step down from the CEO role and have Williams take it over, was fully on board with the strategic plan at the time of his death.

“Brett’s death really galvanized the company,” Williams said. “We decided the best way to celebrate Brett was to bring this company to the level we all wanted and put all that vision into fruition.

“We were just even more determined to do it.”

The whole idea was to put together an A-team of seasoned cannabis professionals who have been pioneers in the Colorado industry.

It would include leaders and innovators who had risked even criminality in the early days before cannabis legalization in the state and who always had to be disciplined when it came to running efficient businesses.

“This is a whole different paradigm,” Williams said. “The principals that we are rolling together have over 170 years of regulated cannabis experience; that dwarfs everyone else.

“These are some of the best pioneers in the state of Colorado, a pioneering state itself in terms of passing legislation for both medical and recreational cannabis.”

M&A expertise needed; funding, too

Once the acquisition plan was in place, the two missing ingredients were mergers and acquisition experience to put it all together, as well as additional funding.

Williams had been on the road for 3½ months looking for help in those areas when he happened upon a chance meeting that eventually led to a cash injection from private equity group Dye Capital, based in Boca Raton, Florida.

Williams was at a restaurant in Florida, about to unveil his standard presentation, when a diner sipping a glass of wine asked him bluntly about the suspect ethical nature of his business.

Williams, thinking on his feet, looked at the glass of wine and questioned the diner about the ethical nature of alcohol. The diner agreed he had a good point.

That diner turned out to be Leo Riera, a Venezuelan national who was a partner with Justin Dye at Dye Capital.

Riera, a former member of the Venezuelan parliament who fled the South American country as an opponent of then-leader Hugo Chavez, was at the restaurant only because he was meeting a friend.

But Riera arranged a meeting with Williams and Dye, and Dye was quickly on board with cannabis. An initial $5 million commitment turned eventually into $18.2 million.

“Justin fell in love with the story, and he liked it even more when he saw all the things behind the scenes,” Williams said. “Justin joined the board (of Medicine Man Technologies), and so it’s clear he’s not in it just to make a quick profit, he’s in for the long term.”

And it is Dye’s corporate background that has been instrumental in building the infrastructure behind Medicine Man Technologies’ buying spree.

Dye built part of his wealth through large-scale acquisitions at grocery store chain Albertsons in his role as chief administrative officer, helping boost annual sales there from roughly $10 billion to $60 billion.

Dye brought with him a number of former Albertsons executives to put the foundations in place for the major infrastructure needed to effect the efficient M&A strategy Medicine Man Technologies needed.

But the Dye Capital investments to date aren’t enough to cover the full cash component of the $286 million acquisition price tag, according to Mike Regan, an equity analyst for MJBizDaily’s Investor Intelligence. 

“Though Medicine Man Technologies will need to raise more cash to close the acquisitions, our analysis shows that it is a good use of capital if management expands EBITDA margins from 20% to 30%, the company’s goal,” Regan said.

“They can also borrow against the positive EBITDA, so I expect that at least some of the funding will be nondilutive debt financing that levers the returns to equity.”

Then, all the pieces could be in place for Medicine Man Technologies to take its big leap forward.

“We will be one of the companies that emerges from marijuana prohibition to be a leader in the world,” Williams said.

Nick Thomas can be reached at

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