Founded in 2017 by CEO Jared Maloof and friends, Cleveland, Ohio-based Standard Wellness is a vertically integrated multistate operator of modest size that as much as any of its larger peers has its finger on the pulse of local cannabis consumption, operating in Utah and Missouri, the aforementioned Ohio, and shortly in Maryland, where the…
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Founded in 2017 by CEO Jared Maloof and friends, Cleveland, Ohio-based Standard Wellness is a vertically integrated multistate operator of modest size that as much as any of its larger peers has its finger on the pulse of local cannabis consumption, operating in Utah and Missouri, the aforementioned Ohio, and shortly in Maryland, where the company was just awarded a cultivation license. Standard Wellness currently has two dispensaries under The Forest brand, one each in Sandusky and Springfield, Ohio, with another under construction in Kansas City, Missouri. It also was the first vertically integrated operator in the Buckeye State, and in January 2019 proudly served the state’s first patient from The Forest Sandusky store.
The company also operates several cultivation-slash-processing facilities, with more on the way, and produces and markets a slew of various products – flower, vapes, concentrates, edibles, and topicals – under its two main product brands, The Standard and The Solid. A private company operating out of Cleveland with a workforce of about 130 people spread across its operations, Standard Wellness, like many in the space, is both established and finding its way, as its soft-spoken and disarmingly candid founder explained during a call with CBE last week. Maloof, who grew up in Cleveland, sort of stumbled into the cannabis industry, not unlike a lot of us.
“Did you ever see the movie The Goonies,” he said, when asked about the hows and whys of his entrance into the industry. “The Fratellis were questioning Chunk about where everybody was, and he said (paraphrasing), ‘It all started in the second grade.’ I use that joke a lot.”
It’s a line that certainly applies to a lot of people in cannabis, no matter their origins. “I grew up in finance,” Maloof continued in a more literal vein. “A family run business for a while, but then graduated from college, went to KPMG as an accountant, and then worked for a large aluminum roll manufacturer, helped raise a billion dollars in bonds to get them public, and we got to within one day, but then the market crashed, and we lost our chance.”
This was in 2012. “After that, I was charged with selling the company – a $5 billion revenue company – and I led the efforts in due diligence for almost a year. About eight months in, the deal fell apart because the Japanese acquirer concluded that we were just too big for them to successfully integrate. That’s a very good reason to walk away from a merger, but it’s also one of those things where you knew how big we were before we started talking, right? It was certainly deflating, and we quickly shifted due diligence to a Chinese company, but because of our defense work I knew that it would never get through. Ultimately, the Trump administration blocked that merger, but when we started engaging with the Chinese and thought we were almost sold, many of the people at the top of the company were looking for their next opportunities. The Chief Operating Officer and the CEO both left, and I had an offer. Carl Icahn and his people had reached out to me about being the CFO of one of the metals companies in their portfolio, and so I flew to New York, met everybody, and ultimately it was the right opportunity, so I took it.”
Metals, said Maloof, can be a frustrating industry. “The market sometimes moves for good reason, for medium reason, and sometimes for no reason whatsoever,” he explained. “The commodity cycle is typically seven years, where you have steady growth for 5-6-7 years, the market tanks, and then you do it all over again.” However, he added, while that span of time has historically consistent, in recent years the seven-year rule of thumb has gotten compressed.
“I’ve dealt with a lot of ups and downs during my tenure in metals, which spanned from 2007 to 2019,” he said. “I hadn’t grown tired of metals, but in the last Carl Icahn company I worked for, you buy used beverage cans for 62 cents a pound, then you turn around and sell them for 64 [cents]. If you do enough of that volume you can make a pretty good living, but God help you if the market goes down while you’re holding a significant amount [of cans]. So, you’re constantly in this, ‘Alright, it’s time to cut’ phase, to ‘Alright, now we have to hire again.’”
Then came the call from a high school friend. “Kevin Murphy – not the Kevin Murphy from Acreage, but a different one who’s been in cannabis since 2009. He told me they were going to legalize marijuana for medicinal purposes in Ohio. Table stakes were $300,000 to help this legislation along. What did I think?”
Maloof did not have lobbying connections – Murphy brought all of that – but he was not without assets. “He had watched my career, and while I don’t have significant wealth, there are people in my family that do,” said Maloof. “[Murphy] said he was he was organizing the Ohioans for Medical Marijuana, there were seven teams that had all put in 300 grand, and they needed an eighth team. I said, good news, I’ve saved $301,000 in my life, and I’d like to diversify my portfolio, let’s do it. There was a little bit of family money in there, too.”
But was he investing in a lobbying effort, a business venture, or both? “The law we drafted basically said, we’re going to give away 12 licenses, and here are the things you need to do to qualify to get one of the licenses,” explained Maloof. “There were probably six of these types of boxes, and if we got [the bill] passed by the voters on the November ballot, we would be assured that we checked all those boxes, and thus we would be one of the very few people that could possibly acquire one of these licenses.
“Having read the law, and having done enough capital raising my life,” he continued, “I knew I could write my check for 300 grand, and I could go find investors to replace my 300 grand in two seconds. By just building a deck, getting a subscription agreement, doing the legal documents, and then approaching the marketplace, I would already have had all of my money back plus a couple million dollars spoken for. Well, about two weeks after I had written my check, the [Ohio] legislature said, you know what, this initiative looks like it might pass; we’re going to write our own law. And I’m like, oh hell. I had everybody lined up to put money in, but I hadn’t taken any subscriptions yet, so I went back to them, and said, ‘Look, there’s a law in Ohio, and the Ohio House, totally Republican, read it, the Ohio Senate read it, and John Kasich read it, and I think there is a very low likelihood that the legislature is going to pass a law legalizing marijuana. I’m not taking your money until I know for sure.’ And wouldn’t you know it, another week went by, they passed a law, and Kasich announced that he was going to sign it.”
However, the law that was passed effectively leveled the competitive playing field, removing the things that would have made Maloof’s team a relative shoo-in to win a license. “We were going to have to apply just like every other company, and we went from a 90 percent chance of getting a license down to about 5 percent overnight,” said Maloof. “My money was invested in a super PAC, and the way it works is you can’t get your money back out of a super PAC. Once it’s in, it’s in. So, I went home that day from work, and I said, ‘Honey, I have some bad news. I may have made a bad decision.’ Luckily, she was very understanding, and knew that you can always make more. So, then the waiting game started. The Department of Commerce and Pharmacy needed to write rules, those rules needed to be promulgated and viewed by the regulator, then somebody had to write an application, and then there was a timeline for the application to come out. So, after Kasich signed the law, it was like a year and a half before I knew anything. The only thing I knew during that intervening period of time was that I was out 300 grand.”
But not out of luck or determination. “At that time, I was one of eight [investors], and I was a key funder,” recalled Maloof. “It was really going to be me building up the cap table, but once I realized that it was going to be super competitive, I had to team up with a vast number of people, which meant that instead of owning 70 percent of a company, I was probably going to own 15 or 20 percent, or maybe even less. But I still felt like cannabis was the right opportunity and the right next step for me and my future.”
I asked Maloof what sort of people he needed to collaborate with that would command that type of equity during those early days. “The application writers are probably the most important component to the process because there are some that win, and some that lose, and then there are some that throw up so many apps and maybe they win one or two,” he said. “We needed to team up with the best, and I didn’t have relationships with the best, but some of my early-stage partners did have relationships with the best. We teamed up with a group called Denver Relief, which basically won all of Cresco’s licenses for them, and were able to convince them to take on our application.”
The rest is history. “There were five principal founders of Standard Wellness, of which I am one,” said Maloof. “We were lucky enough to win cultivation, processing, and one dispensary out of the eight we applied for. We didn’t do great on that, but we needed to get fully vertically integrated, and we were the first vertically integrated company in the state of Ohio. It was 2019 when the program finally launched, and the first sale of cannabis in Ohio was from our dispensary on January 16 of that year.”
Did Maloof have a sense of what separates license winners from losers? “I can tell you and I’ve been a part of a lot of applications, and there is one person who stands out as the best there ever was,” he replied. “I’ve watched this person operate; I’ve been in the room when the applications are being drafted. Let’s say you have a question on the form, and it’s 25 words long. This person, Kayvan Khalatbari, can read those 25 words and read it again, and then read it again, and by the end he knows exactly what the writer of that question was envisioning as the proper response. It’s weird, but even by the sentence structure he can determine, this is a diversity question. It may not look like a diversity question on its face but by the way the sentence is structured. They want to know how inclusive you’re going to be as an employer as it relates to x, y, and z. Are you going to hire ex-cons?
“The application process – and I’ve been through a million of them – is not won or lost on your cultivation practices or your dispensing practices or your processing techniques,” added Maloof pointedly. “Every applicant scores perfect scores in those categories. Where it’s won or lost is in social equity, in how you give back to the community, in WBE/MBE certifications, and in green energy and/or environmentalism. Who are you going to hire? What kind of employee discounts are you going to give? What sort of wages are you going to be paying? Is there a great indigent discount? Are you going to use geothermal or wind or solar energy? That’s where these applications are won or lost.”
Organic Growth at Scale
Like most MSOs, Standard Wellness is focused on limited license states, because “they provide the best opportunity to be able to scale your business along with patient demand,” according to Maloof. “As an example, in Ohio we launched with 10,000 patients. Well, 10,000 patients don’t require a million square feet of cultivation space, and certainly not by any one operator. So, if there is an acknowledgment that the market needs to grow over time, there also needs to be an acknowledgment that to survive and succeed you need good margins in the early days in order to sustain your operations and be able to expand and earn the right to lower prices.”
Is it preferable to be vertical because of those market dynamics? “My short answer to that is, it depends,” replied Maloof. “If you are an excellent cultivator and processor, and you create the highest quality and all of your products are in very high demand, it’s not required that you be vertical. However, if you’re not perfect you need margin for error, and having retail assets provides that margin for error. When we started, we had a number of crops that failed. You have very challenging times of liquidity and illiquidity. I’m not trying to tell you that retail is an easy business, but when you can market your own products, it strengthens the core of the business, and in a typical market, retail can be expected to perform well regardless of whether or not one of its cultivators loses a crop.”
Though a private company, Standard Wellness provided us a detailed financial statement, which told an interesting story about how well its retail has done from 2020 to 2021 relative to the processing and cultivation categories. The percentage of sales in retail relative to the other two went from 27 to 49 percent, a jump of 22 percent in one year, which I found as interesting as the actual sales numbers.
“That is super interesting,” said Maloof. “You’re the first person to raise that and I have to agree that it is very interesting.” It would make sense if they had opened more stores, but they did not. “The reason is, we only won one store, and then we made the first acquisition in the state of Ohio,” surmised Maloof. “So, 2020 did not have a full complement of the retail assets. Our acquisition of Springfield occurred at the end of 2020.”
Regarding those numbers, he added, “You’re also looking mostly at Ohio. Our full-scale buildings in Utah and Missouri are currently being constructed. In Utah and Missouri, we have temporary grow pods where we’re generating revenue and we also have outdoor grows in both of those locations. As an example, in 2022, you’ll probably see $3 million in revenue coming from our outdoor grow in Utah on top of call it a million [dollars] in base revenue. The full building will be completed in Missouri in a June, July, August timeframe of this year, and then in Utah the full building will be done in December.”
As the work progresses, branding continues unabated. “Because we are wholesale, we have cultivation and processing, so we sell our branded product through all dispensaries,” he added. “If you’re in Utah, for instance, you probably have seen our Solid carts or Standard branded flower. In Missouri, we’re under construction for a dispensary in Kansas City. In Ohio, knock on wood, we think we won a license in Cincinnati in this latest round. In Utah – where they’re called pharmacies – our dispensary acquisition process will probably have to be through acquisition and probably will be very expensive because there’s only 15 dispensaries in the state to do all the sales.
“When it comes to Utah,” he continued, “everybody says they can’t believe marijuana is legal. It’s the reddest state in the country. Right, but 60 percent of Utahns are Mormon, and if you’re Mormon, you can be denied entry to the pearly gates if you swear or you drink coffee, but for whatever reason if your doctor says you can consume marijuana, you can get into heaven. And what’s interesting is that if you look at the geographic placement of where patient cards are coming from, and it appears as if Mormons are adopting at a greater rate than the general population, the other 40 percent.”
That was no surprise to me, but I still doubted Utah would officially go adult-use. “I don’t believe the state of Utah will go recreational,” agreed Maloof. “I think if the federal overhang comes down, then it’ll be legal everywhere, but I don’t believe Utah will change to a recreational state.”
What about Missouri? “It’ll go rec,” said Maloof, and added, “I think one of the reasons why we’re somewhat successful in acquiring licenses through competitive applications is that we’re Standard Wellness, not Standard Recreation. We think that when graders look at that, it means something to them. But Missouri will go recreational, Ohio will go recreational, Maryland will go recreational. I can’t promise you the timing on any of those, I have my hunches, but I don’t think the Utah regulators are ready to go recreational at any point in time.”
A Methodical Approach
With a growing retail footprint and more feet to come, I asked Maloof how Standard Wellness as a relatively small company deals with its 280E tax burden. “We did nine [million in revenue in 2020], we did $15 million in ‘21, and we did five in the first quarter, so we’re on pace to do close to $30 million in 2022, and in 2023 our revenues will be close to $80 million,” he said. “You’re right, we are a small business, but we have to grow up really fast. 280E is absolutely a part of the problem that we face, and the only way for us to maintain liquidity and to stay a going concern is to be extremely cost conscious, and extremely judicious. We’re not out there spending incredible amounts of money on the VP of Retail from Revlon. We’re not bringing in half-a-million-dollar salaries, even though it would be great. It would be wonderful if we could pay and acquire talent in that way, but we need to be cash-flow positive if we’re going to make it in the long haul. That means we’re not going to be able to do $20-$30 million acquisitions. We’re taking a methodical approach and looking to hit singles and doubles.”
I asked Maloof how, if the company needs to scale both quickly and methodically, he balances the two forces. “You have to set expectations for yourself, your investor base, your board, and your employees,” he said. “When you read about Cresco acquiring Columbia Care for $2 billion or any of the mega-mergers that you’ve seen recently, does it sometimes feel like we’re being left behind to a less-disciplined company? It could feel that way, but we’re trying our best to focus on the long-term outcomes we want for our patients, our employees, and our investors. So, I guess it’s just about expectation setting.”
Does that also make it all the more important to develop at the local level by building out your brand as a company and your brands as products? “Absolutely,” said Maloof. “When you think about Standard Wellness, most of the work has been done in Ohio, and we’re trying to follow that blueprint and improve upon it in other states. For example, as a company we provide a 100 percent money-back guarantee if you’re not satisfied with your product. It’s an expensive program, but we believe it will demonstrate to the patient base that we care, and if we’re doing our job right, it will illustrate and reveal weaknesses in our processes, and if we’re analyzing it the right way, we’ll be able to eliminate those weaknesses and become a stronger company. So yes, it could be an expensive program in the early days, but if we truly learn from it, it’ll make us better than our competition.”
Has the company offered that from the beginning? “We’ve always offered a 100 percent money-back guarantee, but we’ve only recently marketed it outwardly for people to see,” he said. “Normally, we process five to 10 refunds in a week, but the program started being marketed about four weeks ago, and as you can expect, patient complaints spiked to about 20-25. Last week, there were only three of them.”
Does anyone else offer a similar guarantee? “Not that I’m aware of,” said Maloof. “But I watched an interview with Mike Tyson recently, and he said something that really struck a nerve. He said, I’ve gotten good by being very comfortable being uncomfortable. And I believe that, and I think that us giving a guarantee is uncomfortable, and it’s very uncomfortable to be on the phone with patients, and to be constantly emailing them or interacting with them through social media. But creating that discomfort hopefully will lead to strength.”
I asked Maloof about the differing tastes of cannabis patients and consumers based on where they live. “I’ll give you a great example of the nuances of different jurisdictions and patient or customer desires and different tastes,” he said eagerly. “Here’s a really interesting data point, and I only have three data points to look at right now – Ohio, Missouri, and Utah – so my anecdotes go back to one of those three states. Typically, about 50 to 55 percent of sales are occupied by flower, and the balance is processed products, whether they be concentrates, edibles, whatever. In Utah, we noticed if you look at the state data, only 36 percent of sales in the state are flower. We started scratching our heads. Is it because of a lack of high-quality flower? There is a lot of greenhouse flower in Utah. Does it have something to do with the way the laws are written, because in Ohio, you can’t smoke, you can only vaporize. So, we came up with all these reasons. One producer was failing all of their crops, so all that material had to go to processing, and they produced a ton of processed products and no flower, and that helped skew it. And all of those are actually good reasons, but then I got on the phone with my banker, and he was like, ‘Jared, I think you’re forgetting the Mormon Church. They are okay with marijuana being consumed, but they do not want to see their people smoking.’ It’s a reflection of the people within the Church of Latter-Day Saints actually following the direction of the church and they’re not smoking it!”
Standard or Solid?
As mentioned, Standard Wellness offers a variety of cannabis products in two basic brand categories, Standard (top-shelf) and Solid (economical). I noted that I was not sure I had seen it done like that before and asked the reason behind it.
“Ultimately, there was a real important business reason for it,” said Maloof. “We started out in Ohio, and we constructed a state-of-the-art henhouse where we had mothering and propagation and vegetative state, but all of our flowering was done in greenhouses. These aren’t like hoop houses, these are serious greenhouses, but they are greenhouses, nonetheless. Our first few harvests were over the wintertime, and we were competing at the high-end of the market. We thought to ourselves, we got this figured out. Well, then came summer, and we learned we didn’t have it figured out at all. The heat and humidity in the greenhouses were wreaking havoc on our quality, so we failed tests. When a plant is at 100 degrees and 90 percent humidity, it’s not focused on developing terpenes or boosting THC cannabinoids. It’s focused on staying alive.
“So, early in the program, Standard was viewed as very high quality, and all of a sudden we didn’t have high quality; we had lower quality,” he continued. “We could have run it all through processing, but when you’re looking at how a company succeeds, flower is of critical importance. There are a few important reasons why flower is so important. Number one, it converts to cash 60 days quicker than processed product. Number two, labor and packaging costs are significantly lower. Number three, in most markets, flower is in high demand, and you can’t sell a full complement of processed products if you don’t also have flower. Why is that? When a dispensary buyer is looking at how they’re going to spend their dollars, they might not spend all of their processed product dollars on Standard Wellness gummies or our salve or our vape pens if we don’t also give them flower. But a competing producer that has flower can expect better processed sales from that flower, so we knew that even though we didn’t have the highest quality flower, we had to continue to sell flower into the marketplace for all the reasons I just listed.”
I wondered if there is a perception of greater quality difference with flower than with processed products. “100 percent,” affirmed Maloof. “I would say to you that with topicals. edibles, and vape oil, it’s not as easy to tell a difference in quality. But with flower and concentrates, the trained eye, the trained nose, the trained cannabis consumer can tell the differences a mile away. So, we were in a situation where we had low-quality product, but we had to sell it, and we didn’t want to hurt the brand. And by the way, we had already hurt the brand, because we didn’t realize out of the gate that we were selling lower-quality flower through the Standard line. But we realized that we have to sell flower, we don’t want to screw up our brand, it’s not the highest quality, and this is going to happen every year, because summer happens every year. So, we developed a cost-effective line where you’re not going to get top-shelf product, but you’re going to get quality cannabis.”
The design differences between the two brands tell two stories as well. “If you look at the Standard line, it’s really sleek and it appears high-end,” explained Maloof. “It isn’t attractive to somebody who might buy a Budweiser. If you think about Budweiser packaging – stars and bars, red, white, and blue, salt of the earth – we wanted the Solid line to be more fun and playful, and to appeal to a demographic that the Standard line simply wasn’t going to appeal to.”
The company will spend $30 million this year in capex, said Maloof, money that is well-spent but it comes with a slightly bitter-sweet aftertaste. “Even though I didn’t necessarily make the decision, I own it because I’m the CEO, so I view it as the biggest mistake of my adult life,’ said Maloof.
What exactly was he referring to? “Greenhouses,” he said. “Cresco followed the same path in many of their states, and they’re now changing course as well. Greenhouses are great in arid, dry climates like Colorado, Northern California, Utah, and Arizona, but they are not so good in the heat and humidity of Ohio and Pennsylvania and Missouri. So, we did it in Ohio. I sure wish we hadn’t, and we probably won’t do it again.”
Clearly, adapting to the exigencies of cultivation meant creating two unplanned brand categories in an unscheduled pivot, but pivoting is something companies do if they are serious about survival. “In Ohio, mother, veg, and propagation are all indoor,” said Maloof, when asked about current grow preferences. “All of the flower was in greenhouses up until January. We recently commissioned 5000 or 6000 square-feet indoor, so we’ll be able to compete at the highest end of the market. But in Utah and Missouri, we’re in temporary grow spaces in 500-square-foot, highly reinforced shipping containers. In a 500-square-foot environment, you can control humidity, temperature, airflow, and light levels to a degree that is difficult to control elsewhere, so we see really high-quality products in Utah and Missouri. In Ohio, as I said, we’ve had exceptional product in the wintertime, and we haven’t in the summertime, but our fortunes are about to change because with indoor grow we can compete at the highest level.”
In Maryland, the next stop on Standard Wellness’s expansion tour, the growth strategy will depend on several factors. “We have a partner in Maryland, and we’re going to work really closely with them, and it could go a whole bunch of different ways,” said Maloof. “I expect that we will take some of our pods that are in either Utah or Missouri and deploy them in Maryland in the near term so that we can get operational, and we can get some product out to market. But it’ll be sub-scale and it won’t be super profitable, but it’ll be operations. And then we are in the process of identifying properties where we will begin cultivation, but once that property is identified, it’s still 12 to 18 months before you can even plant seeds.”
In the meantime, the company will pursue a brand strategy that draws a bright line between retail and products. “If you look at look at a company like Acreage, their flower is branded The Botanist, their carts are branded The Botanist, their dispensaries are Botanist,” explained Maloof. “So, if I’m another dispensary a mile down the road, is putting The Botanist carts in my dispensary the first thing that I want to do? Well, no. By doing that, I’m advertising the dispensary that’s a mile down the road, and by the way, they’re going to be able to price [those carts] cheaper than I am because they’re selling them internally to themselves.
“So, we want everybody in the state of Ohio to buy Standard Wellness products, but if we named the dispensary Standard Wellness, they might be less likely to support someone who is so overtly a competitor,” concluded Maloof. “We decided we would brand our dispensaries The Forest, and I’m not saying many MSOs followed our example, because they were here a lot longer than we were, but some of them have. Take Cresco. All their dispensaries used to be Cresco, now they’re making them Sunnyside. Columbia Care used to be all Columbia Care, and now they’re making them The Cannabist. I think Verano always had different branding for its dispensaries.”
I asked how much brand loyalty there is among the cannabis buying public at this point in the development of cannabis brands. “I think you can look at other industries as a bit of a guide,” he said. “When I go to a bar, I drink Miller Lite, Coors Light, and if I have to drink Bud Light, I will. But there are some consumers that have to have a certain type of vodka or else it’s water for them. Certain tequila is a good example right now, too. I would say five to 10 percent of cannabis consumers are hyper-focused on brand. In Ohio, there’s a cultivator named Clutch who competes at the highest end of the market. Have you heard the term Apple fanboys? There are fanboys out there for the premium quality cannabis products.”
So, as it evolves, will the business become like the wine industry or the beer industry, where you have your Bud Lights and other big brands, and then you have your craft brands, too? “Absolutely,” replied Maloof. “When you look at tobacco production, it used to almost exclusively be done in the United States because the market was made here. But now there’s a significant amount of tobacco that’s produced overseas and imported here. I don’t think cannabis is going to be much different. Maybe it’ll be produced in Canada or Mexico or somewhere else where the climate is right, but what we have right now is hundreds and hundreds of millions of dollars of investments in buildings that when cannabis becomes super commoditized will only be able to succeed as craft producers.”
Building a Sustainable Future
As Standard Wellness continues its growth strategy, I wondered what factors influenced the pace of product development at Standard Wellness. “We were the second processor in the state of Ohio, and so we had a lead on everybody,” said Maloof. “We started developing products way before everyone else, and what’s interesting is that the longest lead time in the development of a new product actually is the packaging. With the chocolate bar we released, we could have gotten it out the door in a month, but it was six months on the packaging, designing it, sourcing it overseas, then waiting for it to come over on the boat and the approval process. That really was the hardest part.
“But we do have the most diverse product portfolio of anyone in the state of Ohio, and we’re proud of it,” he added. “We’ve developed a process that allows us to introduce new products to the marketplace, and we go through this debate all the time internally. For instance, we’re looking at an inhaler now that I think would be a great product. It would be a medically focused product, and I think we can probably get some decent margins on the product. But I also think we’re going to sell 10 of them a month, and if a business is trying to be sustainable, you have to win in the flower category, the vape pen category, the carts, and in every category.”
What about genetics? How important has finding, creating, and nurturing great genetics been to the company? “It’s extremely important,” Maloof said flatly. “It’s the foundation on which your brand is built. I try to stay away from the conversation, particularly in anything outward facing, because, well, have you ever heard of the Immaculate Conception? It’s unspoken.”
Understood, I replied, and suggested an easier subject: banking. Does the company have amenable financial institutions? “We’ve been kicked out of a lot of banks in our career, but luckily, we have found some high-quality partners that serve us well and are committed to this industry,” said Maloof. “It’s mostly community banks, but our senior lenders have taken a gamble on this space, and we’re grateful that they have.”
What about the different pieces of legislation being proffered at the federal level? Would Maloof hazard a guess about what will happen? “I was actually in Washington a couple weeks ago, lobbying on the Hill, and I spoke to a bunch of people, and got a couple of quotes out there,” he said. “The SAFE Act is the only one that has a snowball’s chance in hell of passing, and the Democrats are poised to lose control of one or both chambers of Congress. They’d better get off their assess and pass it, or else it’ll be five years before anything meaningful passes. This idea that Chuck Schumer and Cory Booker have that it’s comprehensive legislation or nothing is so unfortunate. They want to hold up legislation for expungement and prisoner release, but when you pass a bill at the federal level you’re only impacting federal prisoners. The majority of the suffering by people who have been arrested for using the plant is happening at the state penitentiary or in the county lockups. So, I don’t care how comprehensive they want to get. Unless they want to pass a law that forces states to pass laws, then they’re not going to make much difference. Pass the SAFE Banking Act as quickly as you can because that’s all you’re going to be able to get done!
“The other thing I like saying is that the country spent a trillion dollars over a 100-year war [against cannabis], and at the end of that war, I believe that the plant is going to win,” he added. “What inspires me and what I like to think about is where cannabis is and where it’s headed.”
I mentioned to Maloof that recently I too had been thinking about how cannabis has been with us for our entire time on this planet, and that the eternal nature of that relationship argues for its uninhibited use. “The fact that the human body has an endocannabinoid system that comes with cannabinoid receptors built-in, and that it’s wired into our bodies, I think speaks to that symbiotic relationship that we have had with this plant, and we have always been intended to have with this plant,” he concurred.
That seemed like a perfectly positive place to end our conversation, but I did want to know what keeps Maloof up at night, assuming it was not the neighbors. “Supply chain,” he said without hesitation. “We’re trying to build out 70,000 square feet of cultivation and processing facilities – double that if you add Maryland – at a time when there’s unprecedented supply chain shortages and inflationary pressures. Which means when you went out and raised money, you thought you raised enough. Burt then a couple months later, the market rebid everything and told you, you better go back out, and it’s frustrating.”
To that end, Standard Wellness has initiated an investment round open through June 2022 to raise $15 million to “fund existing and future expansion projects in Ohio, Utah, and Missouri,” according to a company equity tranche. So, with all that, how exactly does Maloof get any sleep?
The answer was as thoughtful as the man uttering it. “When you surround yourself with a supportive shareholder base and supportive lenders, you’re better positioned to deal with those challenges.”
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