Grassroots Cannabis has quietly built a medical marijuana empire with current operations in six states and sights set on new markets
The changing public perception of marijuana can be illustrated by any number of measurements: polls and elections, state and federal policies, tax revenues, arrests and incarcerations, and even the portrayal of cannabis by mainstream media outlets across North America.
But sometimes a simple, personal anecdote carries as much — if not more — weight than any concrete statistic.
For Grassroots Cannabis CEO Mitch Kahn, the turning tide can best be explained in two conversations with his father.
“When I was a kid growing up in Milwaukee, Wisconsin, my dad said to me at one point, ‘If I ever catch you with marijuana, you don’t have to worry about being caught by the cops. I’m calling them myself,’” Kahn says.
Decades later, when Kahn and his business partners began exploring new opportunities, he spoke once again with his father about marijuana. By that time, more than a dozen states had legalized cannabis for medicinal purposes and many stigmas from the Reefer Madness era were disappearing.
“He said to me, ‘If you could get me something that would help my arthritis, I’d be happy to take it,’” Kahn recalls. “It was one of those light-bulb moments for me personally. If my dad, who was as anti-drug and anti-marijuana as anybody on earth could be, if he changed his view because of his personal, physical issues, it was just an indicator that the entire world would evolve and change their view.”
And not only did Kahn follow through with his marijuana venture, but he did so in a big way, guiding Grassroots from its inception as a small chain of Illinois medical dispensaries to its current status as one of the largest vertically integrated, multi-state cannabis operators in the entire U.S.
A Public Persona
Grassroots could be the largest cannabis company no one’s ever heard of.
The Illinois-based company currently has 27 total licenses, more than 200 employees and operations in six states, including 21 medical dispensaries in Illinois, Maryland, Ohio and Pennsylvania operating under the Herbology, Greenhouse and Windy City Cannabis brands. Some of its dispensaries are owned outright, while others are under management contracts. It also has pending applications in Arkansas, Connecticut, Michigan, Pennsylvania and Virginia and is actively pursuing acquisitions in Arizona, Florida, Maryland, Massachusetts, Nevada, New Jersey, Ohio and Vermont.
And yet, the company has avoided the green rush limelight of glitzy grand openings and high-profile expansions. In an industry that either attracts or breeds a certain amount of braggadocio, Grassroots is a refreshing outlier — a company not only willing to maintain a low profile but doing so by the design of its founders.
“In general, we’re below-the-radar-screen guys in how we approach our business every day and that’s not going to change,” Kahn says. “We didn’t see any reason to become public, but we’re obviously entering a new phase of this business over the last year.”
The company is now embracing a more public persona, in part due to the increasing acceptance of cannabis, particularly as a medicinal product. In 2014, the year Illinois’ medical marijuana legalization went into effect, a Gallop Poll showed 51% of people believed marijuana should be legal. Ten years earlier, that number hovered around 35%. Now, the latest Gallop Poll showed 66% of people in favor of legalization — the highest level of support in the research firm’s half-century of polling on the subject. Support for the legalization of medical marijuana is even higher, recently hitting 93% in a Quinnipiac University poll.
But more than just mitigating the fears of concerned citizens, the evolving perception of cannabis as a legitimate business is paving the way for a wider range of professionals to join the industry.
“The number of people who no longer think this is evil is much, much higher, obviously,” Kahn says.
The result is that many business people are no longer apprehensive about what how working for a marijuana company will look on their resume years down the road.
Meanwhile, the industry’s rapid growth and blue-ocean opportunity were among the draws that first attracted Kahn and his co-founders. It was more than just starting a business or getting in on the ground floor of an exciting company — something Kahn has done several times already.
“As we looked at the law passing here in Illinois, we saw an opportunity you rarely see in business: An opportunity to be at the ground floor of an entire industry,” Kahn says.
Grassroots initially won three Illinois dispensary licenses in February 2015. Eleven months later, the company opened the doors to its first storefronts. It has been a whirlwind of growth ever since.
It was a process that lined up well with the expertise of the company’s executives, who have extensive experience in retail, real estate, law and business management. Kahn says Grassroots has had tremendous success at winning licenses organically, as opposed to buying them.
“We’re deal-makers at heart, but winning licenses organically is more cost-effective,” he adds. “You have to do both well, and we have had unparalleled success winning licenses.”
He can’t prove it statistically, but Kahn believes Grassroots has the highest winning percentage of any cannabis company in the United States when it comes to competitive applications in states like Illinois, Maryland, Ohio and Pennsylvania.
Kahn says Grassroots will continue to focus on competitive applications in limited license medical states.
“That’s where we think the biggest value creation is today in this business, but that will evolve as more states move to a recreational or adult-use program,” he says. “The medical world is very different than adult-use markets. Ultimately, you have to be adept at both.”
Kahn and his co-founders have taken a decidedly nose-to-the-grindstone approach, starting with their Illinois operations, where for months they spent every day in the dispensaries, learning the business from the ground up. As they expanded into cultivation and processing, they had a foundation from which to build for the long-term.
“I think starting in retail gives us a much different vantage point, because most vertically integrated companies started in cultivation,” Kahn says. “It gives us a unique perspective on patients and customers. Ultimately, that’s what matters because that will drive the wholesale, growing and processing sides of this business.”
Respecting the Movement
Kahn acknowledges that he and other senior leaders within the company were not lifelong cannabis activists; they came into the business for the financial opportunity.
By most measurements, Grassroots can be described as “Big Cannabis” — the type of company enthusiasts feared would take over the marijuana movement and realists knew would be necessary to bring it into the mainstream — but Kahn recognizes the critical role played by activists who have brought legalization to the forefront.
“I do think this is a very, very unique business, and as much as it’s becoming professionalized, we think it’s important that you respect where we came from as an industry,” he says.
The company’s motto is “Serve, advance and respect the movement.”
“If you delve into that, it’s about bringing the best talent to the table and it’s about serving its clientele, whether those are patients, consumers, retail buyers or wholesalers,” Kahn says.
And that includes manufacturing products for patients with a wide range of ailments, including AIDS, cancer, epilepsy, multiple sclerosis, Parkinson’s and yes, even rheumatoid arthritis.