The upside of uplisting cannabis stocks: Q&A with Curaleaf CEO Matt Darin

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Image of Matt Darin

(This story has been updated to include details about the recent round of layoffs at Curaleaf.) 

U.S. cannabis multistate operator Curaleaf Holdings is in talks with the Nasdaq and Toronto Stock Exchange about possibly uplisting from the smaller Canadian Securities Exchange to gain access to big institutional investors and more liquidity.

The talks come a month after Canadian cannabis producer Canopy Growth Corp. unveiled plans to accelerate its entry into the United States by taking full ownership of three American marijuana businesses the Ontario-based company planned to buy once marijuana became legal under U.S. law.

Canopy hopes the plan will allow it to remain listed on a major exchange such as the Nasdaq or the Toronto Stock Exchange (TSX), although the company acknowledged the Nasdaq has objected to the plan.

Such a move is intriguing to Curaleaf as well, Darin acknowledged to MJBizDaily, saying that officials of the Wakefield, Massachusetts-based company have “been talking about it for a while, with the Canopy announcements and opportunities there.”

Darin replaced Joe Bayern as CEO in May after serving as Curaleaf’s president since January.

Bayern, meanwhile, was tasked with creating a new division to develop “a new CPG-based business model.”

Since becoming CEO, Darin – the founder of Chicago-based Grassroots Cannabis, which Curaleaf acquired in 2020 – said he and his team have been focused on New York’s emerging adult-use market, research and development involving new products as well as creating a hybrid leadership strategy that combines the strengths of Curaleaf and Grassroots.

Darin also has had to oversee recent layoffs.

Curaleaf confirmed to Insider this week that the company laid off about 220 employees ahead of the Thanksgiving holiday.

The company employs more than 6,000, according to its website.

Curaleaf told Insider in a statement the cuts were “a part of an effort to control costs and drive efficiencies in the face of economic uncertainties ahead.”

During an interview with MJBizDaily at MJBizCon in November, Darin discussed Curaleaf’s interest in uplisting to a larger stock exchange, New York’s forthcoming adult-use market and the recently closed acquisition of Arizona-based Tryke Cos.

Now that you’ve completed the acquisition of Tryke, do you have plans to rebrand the assets, such as the Reef dispensaries?

We’re evaluating what we’re going to do. Reef’s got a great brand in Vegas.

Typically, we rebrand the stores to our national brand, but we’re evaluating, and I think we will. But Reef’s a great brand.

We’re integrating and seeing.

In the meantime, you’ve just rebranded the Grassroots brand

That was a refresh of the brand. Smarter marketing people than me suggested it as we’re launching in new states.

It was really a Midwestern brand for the most part, but also on the East Coast, Maryland and Pennsylvania and places like that.

We saw an opportunity to expand it to the West Coast, the Northeast and Florida.

So why don’t we put a fresh face on it and polish it up a bit. It looks really sharp. I’m really happy.

What’s it like to see the Grassroots brand evolve?

It’s very cool. The new icon is a shed, like a mini house.

When I first started Grassroots, I had an office outside of Chicago where my real estate company operated.

It was a Victorian home, and behind the home was a big shed. It was formerly a music school, so they would do music lessons and all that.

When we started the cannabis company, we had our cannabis employees working in the shed with no air conditioning and no heat.

There were not great work conditions, but it was scrappy.

It became part of our origin story – that the company started in a shed kind of like Apple or these tech companies in Silicon Valley.

I have a cool image in my office that our graphic was included in along with the garages of Apple, Harley-Davidson and Google.

What experience or perspectives from Grassroots are you bringing to Curaleaf? 

I think focus on the cannabis consumer and what they want: products and brands, innovation and service experience in the stores.

I’m really trying, as we get bigger and have all these different states and functions, to keep more of an entrepreneurial mindset of wearing different hats and making sure there aren’t silos across the organization.

The strategic thought processes about how to grow in markets and enter new markets.

You know, it’s interesting:

Curaleaf had a successful strategy. Grassroots had a different strategy that was successful in a different way.

So we’re blending them together and finding the hybrid of the best elements of both.

What have you learned from Curaleaf?

I’ve learned a lot about capital markets and being a public company.

My background was more entrepreneurial. I was in commercial real estate and did a lot of transactions and a lot of deals.

Curaleaf was ahead of Grassroots, already being public and knowing people like (Curaleaf Executive Chair Boris Jordan) who had raised capital for large businesses across the world.

Science, innovation and R&D are really a core part of Curaleaf coming out of the medical world, so that’s been a focus.

We’ve got an amazing R&D team based out of Boston.

I’ve learned a lot about the science of cannabis because we have some amazingly smart people on the team – that’s definitely more advanced than what I was doing previously.

What kinds of research and development is Curaleaf doing?

We are focused on some of the trends like solventless extraction and that whole world of the rosins and the liquid diamonds and that next new version of distillate.

Vapes are the second-biggest category after flower, so I think that’s a really big focus – that next phase of the vapor industry and how you get the right mixture of flavor, potency and effect.

Beverages are a fraction of the market today at 1% of the market. But I think as cannabis is distributed more broadly, it’s going to be a bigger category.

Right now, there are some unique logistical challenges to carrying enough beverages in dispensaries where you have to lock up all your inventory at night and things like that.

We launched our beverage brand in Massachusetts, and now we’re going to be launching in some new states.

And then there is also the “need state,” “mood state” type of science.

How do you create a very certain experience?

I won’t reveal too much of the early-stage R&D we’re doing, but there’s an opportunity to create specific experiences through the science of cannabinoids and terpenes.

On Curaleaf’s latest earnings call, you mentioned you’re looking into uplisting to a larger exchange such as the Nasdaq. Can you share more?

Yeah, so hopefully SAFE passes in the lame-duck (Congress).

And, if that occurs, the U.S. exchanges potentially are going to be available depending on what the language of that law actually says.

So we have been proactively speaking to Nasdaq about that opportunity.

That Nasdaq lists non-plant-touching companies that derive all the revenue from plant-touching companies or international companies that are not even U.S.-based feels a little backward.

But to list U.S. plant-touching companies, they need federal legislation to permit them to do that.

We’ve been talking to the (Toronto Stock Exchange) as well.

I think there’s a path potentially to uplist to the TSX, which would be an improvement in liquidity and availability of at least some institutional investors to purchase our stock.

We’re having all of those conversations, and ultimately, we want to figure out the best opportunity for liquidity being accessible to the larger investor base.

Do you still see a lot of opportunity in New York? 

We’re very optimistic about New York.

I think people need to relax a little bit with the proclamations that New York is never going to launch adult use, or it’s not going to include the medical market participants or it’s going to be California all over again.

We would love to see it moving faster, but these things take time.

There’s been a lot of confusion regarding what the (New York Office of Cannabis Management) has planned, and I think a lot of the confusion stems from the CAURD program, which is a separate program from the adult-use program for the registered organizations (ROs) like Curaleaf that are currently participating in the medical market.

So people read certain rules and interpret that to say that the ROs would be subject to all those, but there’s actually two different programs.

So we still expect the rules for the adult-use program in addition to the CAURD program to get published in the first part of the year and then, ultimately, to see adult use get launched later in the year.

But New York’s a state of 20 million people. It’s going to be the hub of the East Coast at some point. It’s got a great cannabis legacy history.

New York City is New York City, so we’re very excited. We’re the largest player there.

We have about 50% market share all told in the medical market.

So we’ve already been investing and reinvesting for adult use and expanding capacity.

There’s going to be a big enough market that has a role to play for all of the social equity entrants as well as the incumbents.

Does Curaleaf have any more plans for M&A?

We just closed the Tryke acquisition.

That was really exciting, to add six new dispensaries and a new flagship that we’re building on the Las Vegas strip and additions in Arizona and Utah.

It’s probably the biggest transaction that has closed in cannabis in quite a while. So we’re still integrating, digesting that.

We’re always on the lookout for opportunities, but we’re being very judicious with our filter on deals because there’s going to be a lot of opportunities next year.

(This interview was edited for length and clarity.)

Kate Robertson can be reached at kate.robertson@mjbizdaily.com.