As more states legalize cannabis and the industry charts a path to explode globally, it’s “Prohibition 2.0” according to Ben Kovler, CEO of Green Thumb Industries (GTI) and heir to the Jim Beam bourbon whiskey empire.
Since founding GTI in 2014, Kovler and former CEO Pete Kadens have grown the Chicago-based company into a multistate and multimillion-dollar cannabis enterprise with operations in Illinois, Maryland, Massachusetts, Nevada, Ohio and Pennsylvania – plus plans to expand to Florida and New York.
The vertically integrated medical marijuana company went public in Canada in June and is now among nearly 30 U.S. cannabis companies that list on the Canadian Securities Exchange.
Green Thumb reported revenue of $13.6 million in the second quarter, a nearly 300% increase year-over-year. Net income for the quarter was roughly $400,000, up significantly from a first-quarter loss of $1.6 million.
Kadens stepped down as CEO in late August to focus on philanthropy, among other activities. With his departure, Kovler took over the job – a position he held before Kadens, who remains on the GTI board.
As Kovler expands his cannabis empire, he’s taking a page from a playbook crafted by his great-grandfather, bourbon mogul Harry Blum, who made his fortune investing in Jim Beam at the end of Prohibition.
Marijuana Business Magazine caught up with Kovler to get his thoughts on brand-building, corporate leadership and alcohol companies investing in cannabis.
What lessons can the cannabis industry glean from the alcohol industry?
I think there is a lot of similarity. We like to say that history doesn’t repeat, it rhymes. This is Prohibition 2.0. And just as credible, trusted brands transformed the alcohol industry, we believe the same will happen in cannabis. The tidal wave of demand combined with operating at the cusp of regulatory change presents massive opportunity.
What’s your take on the targets Big Alcohol firms are looking to acquire, and is GTI positioned to take advantage of the opportunity?
At this point we’ve got our heads down, focused on executing our strategy to enter limited-supply markets, get open and scale our CPG (consumer packaged goods) and retail businesses. At the same time, just as Big Tobacco acquired alcohol companies in the 1960s, it makes sense for alcohol companies today to pay attention to cannabis as consumer preferences shift. GTI is poised for growth with a strong balance sheet, and we like to put ourselves in the position to maintain optionality that maximizes shareholder value.
You’ve talked about the importance of brands in the industry. How is GTI positioning its brands to win over consumers in the marketplace?
Brands are real. They are trusted and authentic relationships with the consumer, and they drive purchasing decisions every day. We believe brands distributed at scale is how to win, and we’re investing heavily. We’ve developed several and will continue to expand, including Rythm, The Feel Collection, Dogwalkers and a female-focused brand that is under development. In the same way that alcohol companies categorize hard liquor, beer and wine, cannabis has those parallel segments with concentrates, vape and flower. We are a consumer packaged goods business creating cannabis brands and experiences.
In recent months GTI has reworked its leadership team. What qualities do you look for in leaders?
The team is everything. It’s all about hiring and surrounding ourselves with the right people, ensuring strong cultural fit and continually getting people in their lanes so that they and the business can succeed. Our team will more than double this year, but despite the growth, we don’t take shortcuts. Creating an environment where people want to be and work hard and contribute to our mission is a big lift, but something we take very seriously.
We look for people who can add significant value in a specific part of our business in a way that elevates and brings credibility and integrity to GTI. Most importantly, they aren’t afraid to roll up their sleeves. Glen Senk has experience leading high-growth brands, and (fellow Green Thumb board member) Wes Moore understands the need for the revitalization of impoverished communities impacted by the failed war on drugs.
It’s been projected that consolidation will continue to accelerate across the cannabis industry over the next five years. What’s your projection, and where does GTI fit into this equation?
We can learn a lot from history. The cannabis landscape looks similar to other historically fragmented markets such as cable and telecom. It’s already happening now as investors and operators see the massive U.S. opportunity. This is a $50 billion to $70 billion market, and no one player has 1% market share. We believe there will be a lot of winners and a lot of ways to win. The best we can do is execute on our business plan, allocate our capital wisely and put our business in the best position to create long-term value for our shareholders. This is a long game, and we’re only getting started.
This interview has been edited for length and clarity.