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Ep. 417: Ben Kovler, GTI

March 25, 2019

Ben Kovler gives a rundown about the reasons behind his involvement in cannabis, emphasizing the same core goals now that he had five years ago. He focuses on distributing brands of scale as a winning strategy, thinking of cannabis as a consumer packaged good in need of a consistent and authentic branded experience. Taking advantage of capital markets on both manufacturing and retail sides provides great opportunities during what is becoming the end of a sort of Prohibition 2.0.

Transcript:

Seth Adler: Ben Kovler joins us. Welcome to Cannabis Economy. I'm your host Seth Adler. Download episodes on canneconomy.com, that's two Ns and the word economy, or wherever you currently get your podcasts. First word from MedMen and then Ben Kovler, MedMen continues to expand its footprint on the cannabis landscape, opening new stores in Los Angeles, Las Vegas, and the iconic Fifth Avenue in Manhattan. They've also opened a 45,000 foot, high tech cannabis cultivation and manufacturing facility in Nevada. The company has reached a one billion dollar valuation making it the country's first cannabis unicorn and it's just the beginning. Learn how MedMen is building the future of cannabis today at medmen.com.
Ben Kovler, thank you for having me in, very much appreciate it.

Ben Kovler: Sure.

Seth Adler: We're in the Notorious B.I.G Boardroom.

Ben Kovler: Yes.

Seth Adler: I feel like that should be pointed out.

Ben Kovler: Okay.

Seth Adler: Is this your, you know, what?

Ben Kovler: The team-

Seth Adler: The gift to the world?

Ben Kovler: No, no, no. The team does all the naming of the rooms and taking ownership of the place. Everybody likes to enjoy where they work.

Seth Adler: Yeah.

Ben Kovler: Cause there's It Was All a Dream-

Seth Adler: Painting here, there's coasters that are themed as such!

Ben Kovler: All thematic. We can take you to other rooms for other themes later.

Seth Adler: Well let's talk about why and how you are in cannabis, Green Thumb Industries, GTI. You guys are doing okay, huh?

Ben Kovler: Thank you. Yeah. Every day is a new day.

Seth Adler: Exactly. I feel like I notice, well now they're in this state, now they're in this state. Give us a sense of, you know, what today is. So, Podcast land knows no time but I would imagine the outlook remains the same, which is get to as many what? Limited License states as possible. Right?

Ben Kovler: Yeah, I mean the core of our thesis remains the same from 2014 to here in early 2019, where we believe distributing brands of scale is how to win. We think this is a consumer packaged good offering a consistent experience to consumers that can be branded, and at the end of the day there's gonna be pricing power, pricing premium, and consistent, authentic brands. How that industry unrolls and where we are and what happens is gonna be interesting along the way and what we've been able to do is position ourselves in the market to take advantage of what's going on now in the U.S., in the capital markets, in various states, on the wholesale manufacturing side, as well as the retail side.

Seth Adler: So you see retail as just any other brand? Is that why you're in retail at all cause you don't have to be? Or do you?

Ben Kovler: So you don't have to be. We think it's quite an opportunity in what we sorta said is prohibition 2.0 to own both the booze and the packaged good, as well as the bar, and the place of consumption, the place where they can purchase.

Seth Adler: A unique opportunity.

Ben Kovler: So, we've really built two businesses within one business. We're producing this branded CPG products at various manufacturing facilities around the country and we're also running a growth retail chain where currently there's fifteen stores, after the acquisition there will be eighteen stores with plenty in the pipeline where those unit economics are very attractive, and core to our business model is while we are vertically integrated, it's sort of a non connected vertical integration, meaning all the products we make, we're selling to all the stores. So, in Illinois, you can find Rhythm and Dog Walker in every store in Illinois. Same in Pennsylvania, same in Maryland, and at our stores at Rise we're buying from others. So, it's not a pure, if in the analogy, it's not a Budweiser bar. It's a consumer experience and Rise is known for the menu and known for the curated product from all the folks.

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