On Thursday morning, Cannabis Wire reported on the news that Bruce Linton, the founder and former chief executive officer of Canopy Growth, one of the world’s largest and highest valued cannabis companies, is headed to Vireo Health as executive chairman.
To recap: Vireo is one of ten medical cannabis license holders in New York, where the company is also licensed to grow hemp. Linton was ousted as Canopy CEO due in part to pressure from global alcohol giant Constellation Brands, which is behind brands like Corona and SVEDKA and invested $4 billion into Canopy.
Cannabis Wire caught up with Linton and Kyle Kingsley, the founder and CEO of Vireo, to learn more about the story behind the announcement. (This conversation has been edited for length and clarity.)
Cannabis Wire: How are you both feeling today?
Kingsley: We’re on the cusp of exceeding the trading volume for when we went public in March. So that’s a good thing on volume and visibility.
Linton: And the reason it matters to the cannabis sector generally is that we’ve had about five or six months of everybody saying, ‘well, it’s over, it’s done, there’s no future.’ It would be nice to quit hearing that. And so hopefully we can kind of help turn a corner.
It’s also a perspective thing. I don’t know, like, is the sky falling? Or, am I lucky I can touch the sky? I don’t know. It really depends on how you look at it. Is this a deserted island or do I have an island all to myself? So right now, it’s like this is the greatest time to get in the cannabis business.
Cannabis Wire: Tell me about how you came to know each other.
Linton: Well, I did a lot of media and Kyle appeared to listen. And then I got fired and that day I did more media and then I had a lot of people text me, WhatsApp me, call me, email me. And Kyle was one of them. I knew of his company, but I did not know Kyle. And we spent from July 3rd until today interacting a lot. Me hosting him in Canada and driving him around. And, really, what I needed to do was limit my downside risk that there was gonna be a material conflict of personalities or that there was not enough content to make it worth bringing it to the light of the world.
Kingsley: The flipside of that is, obviously, I was aware of Bruce. I hopped into the business back in 2014. And I admired Bruce from afar—there’s just a lot of philosophical alignment—I appreciated his focus on IP and the long term plan. That was something that was very synergistic and I just always thought there’s no company that we have more in common with, nobody I have more in common within the space, I think, than Bruce. I reached out to Bruce when I saw how open he was about the transition with Canopy, he obviously wasn’t wounded or crawling under a rock or anything like that. I decided to send him a text and he responded pretty promptly. I went up to Ottawa. We spent the day together and I’ve spent the last few months here really, really learning about each other and making sure there are great synergies, which there are.
Linton: And, I don’t want you to picture a day where there’s, you know, a table, and he’s on one side and I’m on the other with an organized list of questions. In fact, I had a suitcase with a broken handle and I had to go take that and get it repaired because I didn’t want to throw it out. And I had to go check out a construction project, resuscitating a great old building. And I wanted to drive him around and show him from the outside all the stuff that we had created at Canopy, at least in the city of Smith Falls.
I’ve had Martha Stewart in my car, Snoop in my car, a bunch of people who are billionaires in my car. I believe that if you drive with somebody and the windshield is the basis of your meeting if you have 45 minutes together, you largely really have actually connected or disconnected. And so Kyle and I did that for four, five hours, it was great.
Cannabis Wire: Are there any specific aspects of how Vireo is doing business that were appealing to you?
Linton: I like limited license states and I like the ones which are likely to actually become dual. So I really like the fact that Vireo started in Minnesota but has capacity in places like, say, New York.
And Canopy ran a thing where we basically trained everybody in the entire company to identify an adverse reaction. And we created an obligation on them to report it, and to seek reporting for all of our patients. And so when I was talking to Kyle, they’re like, yeah, for four years, we’ve been running essentially an adverse reaction in our post market surveillance. And so that means that they’re actually thinking like scientists and acting like responsible practitioners. And that means that a bunch of the behaviors that you’ll see through the whole company carry that theme.
And for me, I wanted more content than visibility. And to me Vireo is way more content than visibility. And when I looked at their cap table, it’s not overly complicated. I think they got caught up in what happens with a lot of the companies that went out, they got pushed along at a high valuation. Now they built more value and are under the value they should be. I turned down a bunch of offers with much larger companies that would’ve paid me a lot bigger chunk of cash and stock, because I’m not getting any cash on this. I’m getting stock worth effectively zero the day I start. We have to build value. But I thought the potential with these ingredients was much better to really make a big change.
Cannabis Wire: You have taken on one other role similar to this with a company in Michigan, Gage? Can you tell me more?
Linton: The guys that are in Michigan, I’ve known for several years from their operating experience in Canada. They were invested indirectly through a company called Canopy Rivers [Canopy Growth’s investment arm]. They really understood how to comply. And they were working their way into the Michigan market and they reached out to me, and I knew the funders, I knew what they were about. And they said, you know, we really want to be super dominant in one state and maybe someday an MSO [multistate operator] will buy us but we just really want to kill it here.
And the reason I picked Michigan is I like the idea of creating jobs in that state. I think there’s a whole cohort of brand and positioning development that’s going to come out of Michigan when I think about Detroit and a lot of the thematics that can come from there. I think it could actually be the equivalent weight of a brand development position to California and all the things that come from there. And so that really attracted me to it.
Cannabis Wire: Is Vireo thinking at all about going global?
Kingsley: We really do follow the science and intellectual property, and that doesn’t really know borders. Right now, we’re laser focused as far as actual operations in the United States. But certainly, research and that kind of thing overseas is very interesting. We’re pretty flexible, pretty open-minded, and generally an international-minded kind of crew. But there’s a ton of opportunity in the United States right now as far as actual operations.
Linton: And I’ll just chime in, because part of the thing I like is next week I’m in the UK. I’m in a southern European country meeting with the senior leadership. We’re working in Czech Republic. Like, I think we can bring ingredients together to accelerate. And we may not have to invest, but you just might utilize other jurisdictions with easier regulations.