A rural farmer, general contractor and staunch supporter of unions, Willie McKenzie is not a typical CEO. But the Northern California transplant’s vertically integrated cannabis company, Left Coast Holdings, has grown substantially from its humble, bootstrapped foundation in part because of hard lessons and a willingness to learn.
“I am a big proponent of going deep, not wide,” McKenzie says. “I like to learn to do one thing really well, master the shit out of it and then think about doing something else.”
While the philosophy may sound time intensive, McKenzie and co-founder Trever Johnson, the company’s chief operations officer, have grown Left Coast Holdings from an out-of-pocket, proof-of-concept business in 2020 to a full vertical operation with 86 employees in less than three years. The business includes Heritage Farm, its indoor/outdoor growing operation with a 50,000-plant canopy and a manufacturing and distributing facility, an Authentic 231 retail store and two Heritage Provisioning retail stores with a third location planned to open in the coming months. The company also launched the first Stiiizy retail location in Michigan and later gained notoriety for embracing a union workforce at its Heritage Provisioning retail locations. All of those milestones were in addition to learning the ropes of retail and manufacturing and transitioning from being a California legacy grower to a licensed recreational operator in a market nearly 3,000 miles away.
“It wasn’t easy,” McKenzie says. “But we went for it, and it’s been good.”
Being general contractors, McKenzie and his partner understood the value proposition of unions as something that “just made sense,” McKenzie says. He says the general fear of unionization that is widespread across many industries is rooted in poor labor practices.
When the unions were making their big push in Michigan’s cannabis industry, McKenzie figured the company was already paying the equivalent of union wages, along with benefits that included good health care and life insurance, so “why hide from them?” he says.
“I just hit them up and talked to them,” he says. “We were the first ones in the state who were open to them, and I negotiated, what I consider, was a really good and fair deal with them.”
At the end of the negotiations, Left Coast Holdings wasn’t forced to increase wages and the insurance options already in place were better than what the union would have required, so there weren’t negative repercussions for the business or its employees, he says. In fact, he says, while retail turnover plagues much of the cannabis industry, his stores have retained nearly every employee they opened with.
In addition to keeping employees happy, being a union-operated business strikes a chord with many Michigan residents as unions have long provided them with a better quality of life. McKenzie says once unions enter the manufacturing and cultivation side of the industry, he will happily welcome them into the business as well. He even muses about incorporating the union culture into the company’s future branding.
“The unions haven’t gotten into manufacturing or cultivation yet,” he says. “But how cool would it be if there was a ‘union made’ stamp on our vape carts or flower?”
Fueled by Fire
McKenzie’s Northen California legacy grows ended in tragedy.
The 2017 Santa Rosa Fire was eight miles from his outdoor farms, and while the properties did not go up in flames, the crops were soaked in smoke and ashes.
“That was my last year operating in the legacy market in California,” McKenzie says. “I mean, I couldn’t transition into the rec market because, basically, the value of my properties disappeared.”
After spending about 11 years and a small fortune growing in Northern California, he was forced to cut his losses and either find a new property and start over or walk away from the industry.
“I thought about stopping,” he says. “We lost about $1 million, and I was not super-rich. That was all my money. I just remember sitting on my porch and thinking: ‘What a shame that I’m going to let all this experience that I have go to waste, just because I got knocked down pretty hard.’”
One week after losing everything, McKenzie’s longtime friend reached out with an opportunity to start over in Michigan.
“I was feeling it,” he says. “I was ready for a change.”
Moving to Michigan
The move to the Midwest brought several revelations. For starters, property was far cheaper and landowners were considerably more lenient than what McKenzie found in California. McKenzie and his partner bought a 50-acre organic pickle farm and were allowed to make quarterly payments that were still lower than the average monthly payment would be in California.
When it came to cultivation, McKenzie found the fires, dry wells and rock-laden soils he was used to in California were things of the past, but then again so were the multiple annual outdoor harvests.
“It’s got this beautiful sandy loam, so we can plant directly in the soil,” he says. “We can only get in one run for our outdoor, but we still get multiple runs for our greenhouses.”
The shorter growing season wasn’t the only learning curve for the Heritage Farms cultivation team as the climate also quickly provided a harsh lesson.
“In our first season, we planted a little bit early, trying to get a head start, but we had a late freeze and we lost like half of our starts,” McKenzie says. “It’s the same thing when you get into harvest. The weather last year was horrible; the guys were harvesting in 30 degree weather and in rain gear every day. It was brutal.”
Heritage Farm’s outdoor flower brand, Caddy, was a bit of an anomaly in Michigan. There were other growers in the state who produced outdoor flower, but most of the crops were being sent directly to extraction, McKenzie says.
“People in Michigan weren’t growing outdoor smokable flower, it just really wasn’t a thing,” McKenzie says, adding that the company built its Caddy brand around the novelty. “We sell high-quality sungrown flower at a really reasonable price. People love it. We sell it in our stores for $50 an ounce, but I’ve heard of other people selling it in their stores for as low as $25.”
Despite his years of experience in cannabis, McKenzie had never spent much time working on the retail side of the industry. But it was an opportunity he couldn’t ignore.
“It felt daunting to me to open the store,” he says, “but we got a license and so we were going to do it.”
McKenzie’s partner, Johnson, was an equity member in the Los Angeles-based Shryne Group, which gave the Left Coast Holdings team a chance to dive into retail by helping open the first Stiiizy cannabis store in Michigan — which is now owned and operated by its parent company. Following that success, the company partnered with Authentic 231 and opened the first cannabis store for Left Coast Holdings. With two successful launches behind them, the Left Coast Holding team opened its first two Heritage Provisioning, the company’s in-house retail brand.
“Both my partner and I are general contractors, so we built all our facilities ourselves,” McKenzie says. “Putting it together was easy, but making all the businesses hum together — that’s hard.”
The company hired a retail manager with years of experience in managing medical dispensaries to oversee its recreational stores. However, as more retail stores opened, the market became drastically more competitive and it didn’t take long to realize “the legacy retail model wasn’t enough anymore,” McKenzie says.
“We brought in retail consultants at first, but now we’ve hired a chief revenue officer who comes from traditional fashion retail to help us out,” he says. “Retail is a science and it’s an art; there’s a lot more to it than you would ever imagine.”
While receiving a whirlwind education in retail, McKenzie found that he would also need a crash course in accounting.
“I hired an outsourced accounting solution, and I thought they were doing a good job the whole time,” McKenzie says. “Then we went to do a merger with another company, and so I sent them my books, and they’re like, ‘These are horrible.’”
Simply hiring another accountant could lead to the same problem happening again, so instead McKenzie enrolled in an online accounting class provided by Harvard. The training and certification not only helped McKenzie avoid making the same mistake, but it also helped develop his entrepreneurial skill set to ensure the company’s future.
In hindsight, McKenzie says the fire, moving to Michigan and vertical integration inadvertently led him to a more prosperous venture in a less hostile regulatory environment and ultimately forced him to become a better business owner.
“I really had to dive in,” he says, “and I think my biggest accomplishment was stepping my game up to the next level.”