The Marijuana Venture Interview: Justin Dye

Medicine Man Technologies’ new CEO sets in motion plans for major growth and talks about why Colorado is still a great market for an investor

In June 2019, Justin Dye’s private equity firm invested $14 million into Medicine Man Technologies, paving the way for the company to expand its operations substantially. By the end of the year, the company had acquired nine Colorado businesses, including Los Sueños Farms, Strawberry Fields and Starbuds, with three more acquisitions expected to close by the second quarter of 2020.

Dye brings more than 25 years of experience in corporate finance, private equity and mergers and acquisitions to the cannabis industry, having helped Albertsons grow its sales from $10 billion to $60 billion annually and become the second-largest supermarket chain in the United States. In 2017, Dye left Albertsons and formed Dye Capital & Consulting.

Now Dye is taking the reins of Medicine Man Technologies as the company’s CEO and executive chairman and he’s bringing the M&A team he worked with at Albertsons, along with several other executives he’s worked with in the past, to build the company into an industry powerhouse.

Medicine Man Technologies’ flagship store in Thornton, Colorado was the chain’s third retail location and cost the company $1 million in renovations. All photos courtesy Medicine Man Technologies.

Justin Dye.

Marijuana Venture: What was it about Medicine Man Technologies that prompted the $14 million investment from Dye Capital?


Justin Dye: When I look at Medicine Man Technologies as an investor, it’s clear the company is leading the Colorado cannabis market and is well-positioned to be one of the most vertically integrated businesses in the entire industry, nationwide. The company holds a significant share of Colorado’s supply chain and with the merger partners, the companies have a proven ability to develop new products, improve operational efficiencies and successfully launch retail outlets. We have also established hefty local influence with consumers.

Our executive team, myself included, brings deep experience from the grocery-chain industry, overseeing successful national mergers and integrations. The announced acquisitions Medicine Man Technologies has brought together give us the chance to apply our expertise in optimizing customer support, point-of-sale technology and being compliant with key regulations. Because the company is laser-focused on a single state market, it gives us an ideal opportunity to structure growth, improve operations throughout the supply chain and ensure profitability and continued expansion.


MV: Medicine Man Technologies is having a landmark year. By this summer, the company expects to have 34 dispensaries, 12 cultivation sites and seven manufacturing facilities. What sort of jump in revenue is the company projecting?


JD: In prior years, this business was about a $10 million a year in revenue. We should have three M&As done in the first and second quarter, which after all the acquisitions are done, we believe it will be at $170 million and the top line should be growing by about 20%.

We projected 20-25% margins and will be pre-cashflow positive. We’ve got a great team that has done this before. We’re really looking forward to the next three to six months to get these things integrated and together in the business and positioned for growth.

By mid-2020, Medicine Man Technologies will have a total of 12 cultivation facilities to supply its 34 retail locations.

MV: The acquisitions across Colorado were swift and precise. How long in advance were these acquisitions planned and what were the guiding criteria that helped the company choose the 12 businesses it did?


JD: As one of the early adopters of adult-use cannabis legalization, Colorado is one of the most competitive cannabis markets in the world. The companies that have survived in this market are tested and proven. These businesses know what it takes to create quality products that meet consumer demands, and most importantly they know how to be profitable with an eye on scalability. The businesses chosen were not only innovators in Colorado’s cannabis industry, but they have also elevated the market to make it one of the most profitable in the U.S.

It has always been a goal of Medicine Man Technologies to unite these successful trailblazers as one company that is positioned to make Colorado the leader of the global cannabis market. The House Bill 19-1090 legislation Colorado passed in 2019 allows public companies to own cannabis licenses and gave us the opportunity to do just that.


MV: Will all the newly acquired properties be rebranded as Medicine Man stores and products?


JD: Our goal is to create an integrated company with a common culture at the core. We know the pending acquisitions have built amazing legacies, including brand stories and established, long-standing connections with consumers. To be successful, we must continue to build on that connection while streamlining business operations. Consumers will always be at the center of everything we do as we work to bring them the best cannabis experience and products.

Right now, cultivation is one of our core competencies and one of our competitive advantages in terms of how we produce and at what cost and the quality we produce at.


MV: You came to the company in December 2019 after working for Albertsons and General Electric. How has that transition been and what parallels do you see between your previous experience and the cannabis industry?


JD: The parallels are this: At Albertsons we had 2,300 stores; here we have 34 dispensaries. At Albertsons we had manufacturing facilities so we produced milk, ice cream, cheeses, bread and deli food at our facilities all over the country; Medicine Man Technologies has manufacturing where we produce edibles, chocolates, beverages, rolled joints and obviously cultivation services for flower and trim.

We also have the cultivation or farm side of this as well. Our team did a lot of work in the food business with produce farms and locking in their yield and spent a lot of time from farm to table, and with that there are a ton of similarities here.

There are also a lot of similarities on the M&A and integration side. We were a heavily regulated industry in the food and pharmacy business at 1,600 pharmacies, where we sold over-the-counter and behind-the-counter drugs.

Obviously with a cannabis business, there are a lot of nuances. I am certainly learning those and will continue to learn those.

We have a great team. We have a 50/50 split between cannabis operators here in Colorado, which I think is the most sophisticated market and probably the most established market in the country, and then a team that has worked with me in other areas from General Electric to Albertsons. We hired the M&A and integration team from Albertsons. We did probably $40 billion worth of deals back at Albertsons over a decade. I brought that team to Medicine Man Technologies.

Prior to becoming CEO, Justin Dye’s company, Dye Capital, invested $14 million in Medicine Man Technologies.

MV: So, is the immediate goal more M&A?


JD: We are implementing our operating playbook right now so we can scale the business to go beyond $170 million. We are getting acquisitions in place and we’re looking at a number of other acquisition targets. I think in the next few months we may have a few more announcements. I can’t promise you that but we’re certainly very aggressive.

If you think about what we’re building here, we want to bulk up on the fundamentals and that means taking care of customers, offering new, innovative products that are safe, and creating healthier and happier lifestyles from our consumers.


MV: Would the targets be in Colorado or are you looking at Illinois, California or any other adult-use markets in particular?


JD: You’re leading the witness.

We’re laser-focused on Colorado. We have great opportunities here in Colorado and we’ll continue to grow in Colorado, but as we perfect our system here and as we build our capabilities, we’ll certainly look outside the state, but we’re not ready to do that just yet.

I see Colorado as that the absolute epicenter for the cannabis business. If you look at the evolution and the sophistication of the operators, they have been through the boom and bust cycles. The ones that are around today are solid. They have had to finance their businesses by themselves. We have really cherry-picked the best of the best to come on board with us.


MV: What is it about Colorado that you find so compelling?


JD: When I look at it, it isn’t the biggest market. But I will tell you right now that it is one of the best markets. If you look at regulation and how regulation was done here, it was done very professionally. We have a business climate here. If you look at the legal market versus the illicit market, it’s much more mature than California. If you look at innovation, there’s a ton of innovation in terms of products, processes and technology that are getting ported into other states from Colorado, and I just think that Colorado is going to continue to have a very big say in the future of the cannabis business. That’s why we’re here, why we’re headquartered here. It’s home and our backyard.

We’re going to be champions for Colorado. We’ll get into other states, no doubt about that, but we think there’s an awful lot to learn from Colorado.


This interview has been edited for length and clarity.


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