In April, hashish big Curaleaf obtained a disconcerting notification from the New Jersey Hashish Regulatory Fee (CRC) indicating regulators deliberate to disclaim license renewals for nearly all of the sprawling multistate operator’s places within the Backyard State. The discover cited a current cultivation facility closure, workers reductions, and clashes with labor unionization efforts as justification.
The event rapidly drew the ire of Chief Govt Officer Matt Darin. An in any other case amiable and upbeat fellow, he wasted no time in responding to the unprecedented CRC choice, calling the transfer “an outrageous act of political retaliation for our have to consolidate manufacturing into one native facility.”
“The CRC board’s motion right now is as arbitrary as it’s missing in benefit and authorized foundation,” Darin wrote to the company.
A couple of days later, the CRC relented and reversed the choice—with a number of strings connected. Curaleaf would offer proof of good-faith efforts to succeed in collective bargaining agreements at every New Jersey facility, attest below oath to its “actions and ways,” show its hiring practices and vendor-selection strategies meet “sure standards,” and clarify intimately its plans for any operational modifications being thought of in New Jersey. In the end, what may have been a expensive setback for the corporate represented little greater than a brief inconvenience.
With operations in twenty-one U.S. states and eight European international locations, vertically built-in Curaleaf is without doubt one of the largest world hashish firms. Its revenues topped $1.2 billion in 2021 and $1.34 billion in 2022. Darin is a relative newcomer to the group, arriving in 2020 shortly after the corporate spent a whole bunch of tens of millions of {dollars} buying different operators and belongings throughout the US.
A graduate of the College of Illinois with a Bachelor of Science in accounting and one other diploma in enterprise administration-management data techniques, Darin later added an authorized public accountant license to his resume. After settling in suburban Chicago, he held jobs in public accounting and industrial actual property, however when Illinois opened up medical hashish in 2014, he jumped on the probability to be a pioneer in a brand new, multibillion-dollar trade. He recruited a number of enterprise companions, utilized for a medical license, and Grassroots Hashish was born a number of months later. Over the following few years, he constructed the corporate into one of many largest multistate operators within the U.S., with 1,200 staff and greater than seventy licenses to develop, course of, and promote in a dozen states.
From 2015 to 2018, as Grassroots expanded all through the Midwest, Curaleaf was blazing a path of its personal, increasing operations up and down the East Coast and buying a number of licenses within the profitable Florida market. In early 2020, Curaleaf acquired Choose, then one of many largest West Coast operators, in an all-stock deal valued at $948 million. On the time, Curaleaf owned greater than fifty dispensaries and declared itself the most important hashish firm on this planet by income.
Curaleaf acquired Grassroots in July 2020 in a deal valued at about $700 million. The acquisition greater than doubled Curaleaf’s footprint to 135 dispensaries and licenses in twenty-three states.
For the primary few years, Darin maintained his function at Grassroots, increasing the model east and west. In 2022, citing his observe report of success, Curaleaf named him CEO.
Born and raised within the Midwest, Darin has a suburban-style, folksy demeanor. He’s simply as snug speaking about his favourite pizza or Chicago sports activities as he’s the worldwide hashish market and capital-expenditure cycles. And when a “holy cow” slips out throughout dialog, his Windy Metropolis roots present. Rising up and through school, he was drawn to the colourful characters who smoked weed and listened to chill music, and the plant served as a continuing supply of inspiration for him each culturally and intellectually.
Lately, he and his household moved from the Chicago suburbs to Miami, the place he can preserve nearer tabs on Curaleaf’s East Coast operations and scout new alternatives. He’s additionally nearer to Washington D.C., the place he has been advocating for reform and taking extra of a management function within the trade.
What made a levelheaded Midwesterner such as you wish to dive into this unstable trade?
I discovered at a younger age that the neatest, most fascinating individuals who hearken to one of the best music appear to make use of hashish greater than alcohol or different medication, so I simply gravitated towards that. I had all the time been a believer in [the plant] and had relations who had been helped with most cancers and the opposite advantages hashish affords.
After I learn Illinois handed a medical-cannabis regulation, I stated, “Holy cow, I can not consider the Prairie State is legalizing hashish.” I truly had some buddies I grew up with who lived within the [San Francisco] Bay Space and had been concerned within the trade, so I knew simply sufficient to be harmful.
The following day, I instructed my actual property companions we needed to apply for these licenses. The extra senior associate stated, “No means. We’ve obtained reputational danger; we’ve obtained traders and lenders.” The youthful one was extra of a cynic and stated, “You understand, we don’t have the political connections in Chicago and Springfield to get these scarce licenses.” So I stated, “Let me do the work. Let me do the due diligence.” I ended up leaping into it and spent a bunch of time in Colorado and California simply studying, networking. We utilized for licenses and obtained three of the unique licenses in Chicago, and that set us off.
Why do you assume Curaleaf provided you the CEO place?
I feel having a background in finance, accounting, and actual property [helped], after which truly having actual hashish operations expertise. On the time, there weren’t that many individuals who had arrange large-scale cultivation and processing services and dispensaries and handled all of the extremely regulated markets and issues like that. So the mix of abilities and having a whole lot of trade data and expertise was an enormous a part of it.
You’ve been a enterprise chief in earlier roles, however what have you ever needed to work on to broaden your talent set since turning into a CEO?
I’m targeted on being an envoy for the corporate, educating individuals concerning the firm, and dealing rather a lot within the capital markets with traders and analysts. I’m additionally actually getting concerned in Washington D.C., doing advocacy for our trade, and serving extra as a pacesetter within the trade. So these are all issues I’m spending extra time on right now than I ever did beforehand.
What have you ever realized out of your conferences in D.C.?
I’ve had a whole lot of conferences with each Republicans and Democrats within the Senate and the Home. I feel the excellent news is you’ve lots of people in Congress who’re eager about assembly with the hashish trade. They wish to hear about the place the challenges are. Secure banking is an enormous a part of the dialog, together with getting some very wise banking reform for our trade.
There are additionally conversations relating to rescheduling, and there’s a lot of curiosity in what’s happening within the illicit market and the way we shield the regulated market. It was encouraging that there’s positively a eager curiosity in wanting to listen to extra and study what’s actually happening. In order that was a optimistic. But when we wish to achieve success in Washington D.C., we have to proceed to pool our sources and relationships and actually work collectively.
A number of firms, together with Curaleaf, have put their operations on pause in California. What’s going to it take so that you can reinvest in that market?
We elected to take a step again from a few of these markets proper now provided that we simply see higher alternatives in different markets, and we’re seeking to protect capital and deal with producing optimistic money circulate. We have to guarantee we’re investing our greenbacks within the markets which might be probably the most worthwhile and probably the most steady, in order that was an enormous a part of the decision-making.
What we’d anticipate hopefully seeing in some unspecified time in the future is stabilization of those massive West Coast markets—the place the provision and demand get again into steadiness and a number of the regulatory buildings are revisited by way of tax buildings and general licensing—and in addition some safety of the regulated market and enforcement of the illicit market. That’s been the largest problem in California, having a thriving illicit market. I feel there’s information on the market that [stabilization] is within the early levels of taking place. So we’ll preserve tabs on it, and when good alternatives current themselves, we are going to revisit it.
Are you involved about New York’s equally robust and established underground market?
Sure, it’s a serious concern of ours. You understand, we had been founders of the medical program in New York, and we’ve obtained virtually 50 p.c market share in that market. So we’ve been working there for years, and we’re based mostly in New York. However the way in which [the recreational market] is being rolled out presently is just not setting it up for achievement. It’s been extensively reported there are 1,400 or so illicit storefronts in New York Metropolis which might be promoting untested, unregulated merchandise. It’s simply the shortage of enforcement there.
So, sure, it’s a concern, however there’s nonetheless a possibility to rectify it. And there’s a task to play for the registered organizations which were working within the medical trade. There’s additionally a task to play for the social-equity candidates and a number of the new entrants and entrepreneurs available in the market, however it’s a big sufficient marketplace for everybody to coexist, and we’re hopeful that’s going to happen.
How do you view the retail expertise and the buyer expertise? What’s going to change these experiences over the following couple years?
Expertise is altering all the things all over the place, however I feel the expertise on this planet of hashish retail is admittedly altering a whole lot of various things. Take the flexibility for shoppers to order on their cellphone by way of a cell app like they might at Starbucks or Sweetgreen. At dispensaries, you’re in a position to select from a whole bunch of various merchandise, and also you’re in a position to get merchandise really helpful to you based mostly in your buying habits. You’re in a position to both go choose them up or have them delivered to your own home. That complete expertise is evolving rather a lot from what it was even a number of years in the past.
The frictionless expertise shoppers now count on in most aspects of their lives is happening in hashish. Additionally, nearly all of the orders we obtain are achieved on individuals’s cell gadgets and thru pre-orders. That’s actually altering how we design our shops, find our shops, and function them. I feel that’s a pattern we’ll see proceed.
What sorts of new merchandise get you excited, and what do you want to make use of personally?
One space that positively will get me excited is the innovation happening in a whole lot of totally different product classes. It wasn’t that way back you had been shopping for hashish and also you didn’t even know what pressure it was. Now you possibly can go to certainly one of our dispensaries and select from actually a whole bunch of merchandise throughout each product class with a personalized expertise based mostly on what your urge for food is, how lengthy you’re on the lookout for the impact [to last], and whether or not it’s daytime, nighttime, or the weekend.
By way of issues that get me excited, I’ve all the time been an edibles shopper, particularly gummies, and I think about myself a gummy connoisseur. There’s a whole lot of innovation happening with issues like fast onset, the place we will make sure the edible goes to kick in inside fifteen minutes, and in addition shorter durations that final for a number of hours. Numerous the science goes into having the ability to ship that have constantly.
I’ve additionally seen a whole lot of fascinating issues on this planet of solventless extraction and hash and rosins—the actually flavorful full spectrum, the essence of the plant, and all the advantages of that. Drinks are a tiny fraction of the market, however you’re going to proceed to see cannabis-infused drinks of their varied types, and there’s an enormous pattern taking place with individuals of many ages now utilizing hashish in lieu of alcohol. There are research popping out displaying many demographics now favor hashish over alcohol.
To the extent we will proceed offering a distinct sort of expertise and a more healthy expertise, I see that as one of many largest alternatives throughout all markets.
Curaleaf operates at each degree of the provision chain. Which operations are probably the most difficult?
One of many largest challenges I see—and I feel all of the vertically built-in multistate operators most likely are experiencing a lot of the identical—is working at scale and driving towards consistency, finest practices, standardization, frequent merchandise and manufacturing strategies, packaging, and the entire shopper expertise. It’s actually one of many advantages of working on the scale we’re at whereas nonetheless coping with the patchwork of state-level laws that don’t permit you to be absolutely standardized.
The hashish shopper has totally different wants relying on markets, areas, maturity ranges of the trade there, and medical and grownup use. The time period we use is “harmonization, not standardization,” and I feel that’s a great way to explain how we’re harmonizing our operations in a world the place full standardization remains to be not fairly doable as a result of state-by-state nature [of the industry].
How is Curaleaf approaching the capital markets and public exchanges?
We’re all the time taking a look at alternatives to create worth and guarantee we’re positioned to entry capital, however we’ve obtained greater than sufficient money on our steadiness sheets to fund what’s wanted. We’re cash-flow-positive this yr, so we’re producing money. We’re additionally extra mature in our [capital expenditure] cycle, as a result of we’ve already achieved the investing in massive cultivation services in our main markets. So we’ve obtained a whole lot of that behind us.
With that stated, we’re all the time seeking to discover the bottom price of capital and be finest positioned, and we do see some alternatives. The Toronto Inventory Alternate is one thing now we have talked about, so we’re in superior discussions there and see that as a risk. And when the chance arises to checklist on a U.S. change, we’re going to be prepared for that. That may in the end rely on a few of this laws in Washington D.C. It should actually be an enormous occasion for the trade when [federal legalization] occurs.
Whenever you take a look at the opposite multistate operators and their methods, what do you assume makes Curaleaf distinctive?
One of many issues that makes us distinctive is the dimensions and the presence and the market share now we have, and the variety of battleground markets all through the nation. We’ve obtained main market share in locations like Florida, Arizona, New Jersey, New York, Pennsylvania—a variety of totally different markets. The variety of getting the dimensions of presence in a number of the largest markets within the nation, I feel that’s distinctive. I don’t assume anyone else has that footprint and that presence in battleground markets.
We actually proceed to deal with having the ability to characteristic our personal merchandise and types and add to that portfolio and our capability to characteristic that in 150 retail places all through the nation. It’s distinctive to have that capability to characteristic our [house brands] at that sort of scale.
Curaleaf has put extra deal with Europe prior to now couple years. Which markets are probably the most promising?
The 2 markets we’re most targeted on and enthusiastic about are the UK and Germany—the massive markets. The U.Ok. has some 60 million individuals, and we’re the most important participant there right now within the medical market. That market feels just like the U.S. medical markets in perhaps 5 years. We simply see an amazing quantity of alternative within the U.Ok. as that market continues to develop.
The opposite huge one is Germany, which is slated to launch grownup use, and it’s had a medical program to date. We acquired an organization referred to as 4 20 Pharma that has a powerful presence within the medical market, and we’re actually enthusiastic about what’s on the horizon for each the enlargement of the medical market in addition to grownup use. Some headlines got here out just lately relating to what’s going to happen with grownup use and enlargement of the medical program—eradicating hashish from the narcotics checklist in Germany—which goes to make hashish rather more accessible for individuals.
The rest in your thoughts as of late?
Two issues come to thoughts. The primary is how fascinating it’s that hashish legalization is a world phenomenon. Within the U.S., oftentimes individuals are simply targeted on what’s happening right here and perhaps Canada and don’t take note of Europe or Asia or South America. There’s an awakening and training happening about the advantages of hashish for medical functions and the justice related to legalizing it and decriminalizing it for grownup use. I feel that’s going to be a unbroken pattern we’ll see all through the world.
The second is the inflection level we’re at within the U.S. trade. Twenty-seven years after California legalized with Prop[osition] 215, we’ve gone from California being the one authorized state to a $35-billion nationwide authorized market. My house state of Illinois is producing extra tax income from hashish than it’s from alcohol right now, and that’s an incredible statistic. After I’m speaking to politicians in D.C., they’re blown away by that.
There’s been wonderful progress regardless of not having any motion on the federal degree, however we’re additionally at actual danger of getting this complete regulated trade be in actual misery. We’re already there in some ways and in lots of markets. I do assume it’s a very pivotal time for the trade to come back collectively.