Vireo Health Narrows Focus to Six Robust Cannabis Markets Offering Potential Legalization

Exclusive Interview with Vireo Health CEO Dr. Kyle Kingsley

Multi-state operator Vireo Health (CNSX: VREO) (OTCQX: VREOF) realigned its strategy to focus on six core U.S. markets: Arizona, Maryland, Minnesota, New Mexico, New York and Pennsylvania. Founder, CEO and Chairman of the Board Kyle Kingsley, MD, spoke with New Cannabis Ventures about the potential for explosive growth in those markets, the importance of IP and gaining visibility as a player in the MSO space. The audio of the entire conversation is available at the end of this written summary.

New Team Members

Dr. Kingsley last spoke with New Cannabis Ventures in May 2019. Since then, the company has made a number of additions to its team. Shaun Nugent joined the company as CFO, and Bruce Linton came on board as Executive Chairman. Nugent, previously serving as CFO of Life Time Fitness and Sun Country Airlines, brings a depth of experience in private and public company leadership. Linton brings his extensive experience in cannabis to Vireo.

Dr. Kingsley and Bruce Linton at a Vireo Greenhouse

Focused Market Strategy

When considering where to focus its efforts, Vireo selected the markets where it saw the most potential upside and where it had achieved critical mass. The company has a plan in place to be EBITDA-positive in its six main markets this year, according to Dr. Kingsley.

A Vireo Lab Technician at Work

The company also has a presence in markets like Rhode Island, Massachusetts, Nevada and Puerto Rico, but those will have a more peripheral focus.

Minnesota is one of the company’s most exciting markets. The company is planning to double its number of dispensaries from four to eight in 2020, barring COVID-related construction delays. It is searching for the right sites for its additional dispensaries. The market could soon allow flower, and adult-use legislation is a possibility.

Likewise, New York is poised to be an exciting market once it transitions to adult-use; Dr. Kingsley is hopeful this will happen as early as this fall or next spring. Vireo has a large production facility in New York with space for up to 200,000 square feet of additional cultivation.

The medical market has been pretty flat in New York, but the company has experienced dramatic growth with home delivery. Dr. Kingsley sees even more opportunity once adult-use is established in the state.

Vireo also sees opportunities for wholesale in markets like Pennsylvania, Maryland, Arizona and New Mexico. In Pennsylvania, Vireo is nearing completion of a phase three expansion project for an 89,000-square-foot facility. In addition to its wholesale operations in the state, the company is gaining retail traction with dispensaries (two of three built out), as well as its vape brand and 1937 brand.

Vireo is Seeing Its 1937 Brand Gain Traction


With distressed assets coming on to the market, Vireo is mindful of opportunities to augment its position in its core markets. The company is also open to the idea of selling some assets. Selling peripheral assets in locations like Rhode Island, Massachusetts and Puerto Rico could be an option. Vireo is also open to the idea of a merger or being acquired, according to Dr. Kingsley.

Green Goods Retail Brand

The company has a mix of different brands around retail, but it is working on rolling out its Green Goods retail brand. Green Goods will be launched in Minnesota and New York in the coming quarters.

The Green Goods brand is about bringing together the company’s professionalism and experience in medicine, science and cannabis. The company is focused on a best-store concept, while also prioritizing ROI. Executive Vice President of Retail Patrick Peters is using his expertise to support the company’s retail strategy and identify future sites.

The Power of IP

Vireo launched Resurgent Biosciences to commercialize its intellectual property. Dr. Kingsley sees IP as the company’s biggest potential upside beyond its MSO business. The company’s IP largely focuses on alternatives to opioids, alcohol and tobacco.

Opportunity in a Pandemic

While the COVID-19 pandemic has presented some challenges, like construction delays, Vireo has been able to use this time to become more efficient. It has been able to cut down on its G&A, such as shutting down offices, to realize savings. Regulatory changes, like curbside pickup and teleconferencing with pharmacists, have also been of significant benefit.

Capital Position

The company is in a strong capital position and excited about its revenue growth, according to Dr. Kingsley. With Nugent on board as CFO, the company has really drilled down on looking at the ROI of every capex dollar.

Vireo has done sale-leaseback transactions in the past, and it has the potential to execute those kinds of deals on a few of its facilities. If it does need capital, Dr. Kingsley considers selling assets a solid possibility. A transaction for a peripheral or even a core asset could be an option for the company. It makes more sense to be well-funded in fewer markets than underfunded in more, according to Dr. Kingsley.

2020 Growth

Vireo is confident in its organic growth opportunities for 2020. Even without regulatory changes, like new adult-use legislation, the company is seeing growth in Minnesota and New York (with delivery). Retail and wholesale are also growing in markets like Arizona and New Mexico.

In 2020, the company is looking to drive more growth by ramping up its flower production in places with excess demand. Increasing its throughout capabilities in markets like Pennsylvania and Maryland will further drive growth.

Investors want to see free cash flow or a path to it from well-capitalized companies. Dr. Kingsley agrees with this perspective, and Vireo is driving toward that goal.

With a focus on six markets, Vireo is considered a small to medium-size MSO, a group that hasn’t garnered as much attention as operators with wider footprints. But, Dr. Kingsley is confident in the strength of the company’s chosen markets and its opportunities. As it continues to grow, Vireo will focus on building more visibility in the market.

New Cannabis Ventures provides an Investor Dashboard for Vireo Health, which is a client. Listen to the entire interview:

Exclusive article by Carrie Pallardy
Carrie Pallardy, a Chicago-based writer and editor, began her career covering the healthcare industry and now writes, edits and interviews subject matter experts across multiple industries. As a published writer, Carrie continues to tell compelling, undiscovered stories to her network of readers. For more information contact us.

Get Our Sunday Newsletter