Exclusive Interview with Curaleaf President and Incoming CEO Joseph Bayern
Curaleaf (CSE: CURA) (OTCQX: CURLF) CEO Joseph Lusardi spoke with New Cannabis Ventures in May about the company’s pending Grassroots Cannabis acquisition and building out its U.S. footprint. The deal closed over the summer, and President Joseph Bayern is set to step into the CEO role at the beginning of 2021. Bayern spoke with New Cannabis Ventures about leveraging the national platform Curaleaf has built and how the company plans to go deeper within its existing footprint. The audio of the entire conversation is available at the end of this written summary.
The New CEO
Bayern comes from a strong CPG background with more than 20 years of experience in the space. Over the course of his career, he has worked with brands like Snapple, Dr. Pepper, Cadbury and VOSS Water. It was at VOSS that he first started to research the cannabis space. He decided that his background was a strong fit for the emerging industry.
Over the past few years, Curaleaf has been focused on building its platform. Bayern is excited to step in as CEO as the company begins to focus on leveraging that platform to create national brands through its health and wellness brand Curaleaf and its lifestyle brand Select.
The Grassroots Integration
Over the summer, Curaleaf closed the acquisition of Grassroots. Grassroots was a complementary fit for Curaleaf, sharing a similar view of the industry’s opportunities. Additionally, the two businesses had very little geographic overlap. Curaleaf set out to complete integration within 30 days and accomplished that goal, according to Bayern. Aside from a few small regulatory issues, the company is fully consolidated. Now, Curaleaf has more than 3,500 employees and a single mission to guide the combined organizations.
Curaleaf has executed a number of acquisitions over the past few years in an effort to build its platform. Now, it is about scaling that platform and driving efficiencies. The company is focused on going deeper within its current footprint rather than going broader. Curaleaf does plan to remain flexible and pivot if compelling M&A opportunities present themselves in the future.
The National Platform
Curaleaf’s current footprint spans 23 states. The company has 135 dispensary licenses and more than two million square feet of cultivation space. Each state brings different opportunities and challenges. The company is keeping an eye on markets like Illinois, Pennsylvania and Michigan, excited about the future prospects in these states.
Preparing for Adult-Use Transitions
With the recent election heralding adult-use transitions in multiple states, Curaleaf is gearing up to take advantage of that opportunity in markets like Arizona and New Jersey. It is building up its capacity in both states.
The Curaleaf team also sees New Jersey as a potential catalyst for adult-use in other northeastern markets like New York, Pennsylvania and Connecticut. The company continues to work with legislators in these states to help create the vision for a responsible program and to understand what kind of capacity those markets will need.
The company also has a presence in the California market through its Select brand. Like most MSOs, Curaleaf is keen to understand how this significant market fits into its overall strategy.
Fragmentation and tax issues make the California market challenging, but the Curaleaf team will continue to monitor its opportunities in the state. For example, it is not currently vertically integrated in California, and it will consider the possibility of becoming so.
Funding and Capital Allocation
The company’s team views Curaleaf as one of the best-capitalized companies in the cannabis industry, according to Bayern. The company has a supportive investor base that has a long-term vision of what it takes to create value and a multibillion company in this space.
Curaleaf approaches capital allocation with an eye on its current needs and future success. The company is working on building out its capacity to meet market demand and investing in R&D to drive future product innovation. Generally, the company aims to deploy capital for projects with relatively short payback, according to Bayern. But, he and the rest of the team are aware that the company needs to invest in its future growth and remain flexible for changes ahead. For example, federal legalization could necessitate adopting a different business model.
Legislative changes on the horizon could also open the door to new approaches to fundraising. If changes like the SAFE Banking Act or the STATES Act come to pass, companies like Curaleaf could have access to capital at a lower cost to continue fueling growth.
Growth Drivers in 2021
Curaleaf announced with its Q3 results that it plans to release its 2021 financial outlook with its Q4 results. The company’s major drivers of growth for next year will be expanded capacity and product innovation. The company is aiming to build out more square footage of cultivation and achieve better yields. It is also launching new products to continue developing differentiation in the industry.
The company tracks essential metrics like revenue growth, same-store sales and average ticket size. It is also starting to focus more on KPIs that indicate progress in building brand affinity and awareness.
As the company continues to grow, it plans to continue educating U.S. consumers on the value of cannabis. While the channels of communication are different than in the traditional CPG space, the company is passionate about executing its mission to improve people’s lives through its brands and products.
To learn more, visit the Curaleaf website. Listen to the entire interview: