A Medical Marijuana Pioneer Prepares for Pot to Go Big

(Bloomberg Businessweek) -- With your $948 million acquisition of the Select brand—a big supplier of branded vaping oil—many say you’re making a major gamble on adult recreational use, and really on vaping.

It’s a calculated investment based on the thesis that we believe more and more states that have a medical program will adopt adult-use programs. Our brand will fit into that marketplace.

What about the vaping controversy?

This vaping controversy will ultimately only improve the regulated cannabis industry. What this is highlighting is there are a lot of people making really illicit products out there, and it’s screaming for regulation, for controlled cannabis. Consumers will become more aware of what they’re using and look to the regulated markets for products that are tested, regulated, and, frankly, safe.

Vaping has attracted a lot of casual cannabis users who might not have picked up a joint. How do you hold on to them?

I think that vaping is a significant alternative to smoking, and I think a lot of people have embraced it because they do believe it’s safer than smoking. In the data we’re seeing in California, there was an initial pullback in sales of vapes, and now you’re seeing the sales go back up. I think what you’re going to see is more people going into the regulated market. So I wouldn’t characterize it as vaping is the problem, I would characterize [the problem] as illicit products that are being vaped.

Could momentum turn against vaping?

I think people are recognizing that the vast majority of the people that have gotten sick or died are using illicit vape products. If that narrative continues, I suspect that it will just put a higher emphasis on making sure we have a regulated, controlled vaping market, vs. an illegal vaping market.

We feel good about Select because their whole brand was built around the idea of safety and quality. They were actually a leading brand which recognized you needed to have a clean supply chain, cartridges that were made in GMP-certified facilities [which demonstrate strong regulatory compliance], and you needed to have your oil tested for pesticides. Their whole brand was about trust and quality, and it aligns with our values, and we believe that’s going to resonate with consumers who want to vape but don’t want to use something that’s dangerous.

Analysts say that your medical marijuana licenses will give you a big jump if and when your states allow recreational use. What timing do you expect for those moves?

Well, my crystal ball is never really perfect.

But you’re an informed person.

We’re seeing dialog very publicly in New York and New Jersey, where we’re the No. 1 operator. The governor of Pennsylvania recently came out and said he supports adult use, and Connecticut’s looking at it, and we have a big presence. So the states where we operate, you will see a progression towards regulated, taxed, adult-use cannabis in, call it, the next 12 to 24 months.

What about at the federal level?

I’m not sure the country is ready for federal legalization. If I had to guess, I’d say [it will happen in sometime] between 5 and 10 years.
 
Read more: The Vaping Scare Could Give Cigarettes a Second Life

To contact the editor responsible for this story: James Ellis at jellis27@bloomberg.net

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