Vireo Health International Inc
April 15, 2019 Issue
Multi-State Operator Vireo Health International Inc., led by five full-time physicians and a team of scientists, is one of the fastest growing companies in the Medical Cannabis Space
Dr. Kyle Kingsley
Founder & Chief Executive Officer
Vireo Health International Inc
Interview conducted by:
Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – April 15, 2019
CEOCFO: Dr. Kingsley, what is Vireo Health International Inc.?
Dr. Kingsley: Vireo Health is the scientific leader of the multi-state operators in the United States. We decided to announce that we are trading on the Canadian Security Exchange, north of the border, under the ticker VREO. We are fundamentally different in that our DNA is that of science and medicine. Vireo Health has five full-time physicians, a wide array of scientists, and decades of scientific, medical, and engineering expertise on our diverse leadership team. That medical and scientific focus permeates Vireo’s infrastructure, products, and customer experience. We, like all the multi-state operators out there are aggressively acquiring geographic footprint, which is a necessary requirement, but I do not see that as an adequate long-term path from a business standpoint, so we are laser focused on building real intellectual property, proprietary products, and building solutions for the gaps that we see as medical and scientific professionals in the cannabis space.
CEOCFO: Why was this the time to go public?
Dr. Kingsley: We decided to go public now to increase our access to capital, and in order to be competitive in this space. To effectively scale in the space, you basically need to make this transition. For us it is great to access capital and we like the optics and the publicity which surrounds this transition. We are just excited to get the Vireo story out to people.
CEOCFO: How do you combine the business and scientific side so there are no compromises?
In my mind, there are few things that are more synergistic than the
combination of business and science. Obviously, we need to consider the
ability to produce short and medium-term revenues and that justifies the
dramatic geographic expansion. The majority of substantial business
opportunities are science derived, so we believe that this focus on science,
combined with the white space in cannabis, is going to be rocket fuel for
driving opportunities in the future. There are many examples of this, you
can imagine scientific-superiority drives very interesting opportunities and
not just in medical cannabis but also in health and wellness and even into
adult use of recreational cannabis. Folks want precision, they want products
that address new conditions, and most importantly achieve exactly what they
say will consistently from purchase to purchase. They want precision,
quality, and consistency in their cannabis products.
CEOCFO: With so much opportunity, how do you decide where to focus?
Dr. Kingsley: We are uniquely positioned because we can drive innovation due to the breadth of our bandwidth and the scientific and medical leadership within our organization. For example, our Chief Science Officer is an IP lawyer, so we defer to the experts that are on our team, to determine the highest yield opportunities. We are not relying on, for example, an outside medical or scientific advisory board, we have this expertise in-house. I am going to defer to our Chief Science Officer who is also an IP lawyer, on most substantial intellectual property opportunities. We look for the low-hanging fruit, of which there is a ton in cannabis. It is hard to find other multi-state operators who are talking a lot about science. We are not a bunch of bankers saying that we are the best at medicine and science; we are actually board-certified physicians and scientists. The magnitude of the opportunity is critical, but we are not willing to yield on safety, quality, and social consciousness.
CEOCFO: Do people buying cannabis products today, care or understand the science and quality, and do you see a change in sensibility of people looking to make purchases?
Dr. Kingsley: Absolutely we are seeing an increase in understanding and conscientiousness amongst consumers, as far as quality, precision and environmental awareness are concerned. These things are going to be ever more important over time to the cannabis consumer. I think already cannabis consumers at-large, are disproportionately aware of the ecological considerations. They are generally going to want a more natural, organic, holistic approach to things. They are not interested in the slash and burn tactics of big business, to get revenues at all cost. They are going to be more interested in a physician and science-driven organization that is cognizant of environmental considerations. My hope is that over time, it only augments from there. Vireo is very concerned about environmental ramifications of large-scale cannabis cultivation – it is a core tenant of our social conscientiousness.
CEOCFO: How might dispensaries differ in different states, and how do you make your dispensary one that people want to come to?
Dr. Kingsley: We are in the process of rebranding our dispensaries, the new brand will be called, “Green Goods.” The premise here is Green Goods is going to be the most professional, comforting, inclusive experience that you could have in a cannabis dispensary. I am very impressed by the depth of certain cannabis-specific knowledge in some of the mature markets like Colorado and California, but I am generally not impressed by the patient-minded professionalism. If you look at our current state dispensaries in Minnesota, New York, and other states, it is a medicalized experience. It is physician-led and we have pharmacists in each dispensary, and pharmacy technicians play the role of bud tenders.
CEOCFO: Do you know what you need to do to get there?
Dr. Kingsley: We are well on our way. Some of our recent acquisitions - of established operators with dispensaries in Arizona and New Mexico, will allow us to fuse their dispensary knowledge set, with our scientific, pharmaceutical, and medical expertise. I see this as rocket fuel to power a very professional and compelling customer experience in the new Green Goods dispensaries
CEOCFO: What is the key to managing a business with scattered locations?
Dr. Kingsley: You very much need top-quality staff and managers in each location. Ones who are very much plugged-in to the local market - local regulations, local politicians, local consumers, and the government. That is absolutely critical. My approach is that I want to be the dumbest person in the room when I hire my leadership team, and I have been very successful in reaching that goal! I have probably the most amazing circle of people around me in this space, and for me that has been key to keeping my sanity as we have grown by leaps and bounds.
CEOCFO: Do people coming in the company understand what you do and is that attracting top talent?
Dr. Kingsley: We have had essentially non-stop inquiries from very sophisticated amazing people. We have been fortunate in the last months to acquire people from Amazon, FedEx and Macy’s, onto our team. Frankly, most people are willing to take decent pay-cuts to work with us. I like to think it is partly our vision and consistent growth, but certainly the sexiness of the cannabis space does not hurt. We have had very little issue finding top-notch talent from subject matter experts. We look for people from outside of the cannabis space and folks with subject matter expertise. It is very synergistic, which creates an ideal combination of talent, experience, and passion.
CEOCFO: How do you help someone coming in to a dispensary, who does not know what they want, to figure out what is best for them?
Dr. Kingsley: Providing knowledge and guidance to customers is one of Vireo’s key areas of expertise. It is also one of the short-comings of the industry, too often new cannabis consumers go into a dispensary and have a less than optimal experience. Vireo utilizes our medical pedigree to explain things to folks in a clear, easy-to-understand, and relatable manner. Our pharmacy technicians are the “bud tenders” at our dispensaries and they are trained by pharmacists and physicians to help guide folks, whether they have a pure medical issue, such as chronic pain, or something that falls into the health and wellness space like insomnia or anxiety. People want to make informed decision, ideally from scientifically-based information. That is another advantage that our approach drives, we create a superior customer experience with a brilliant and informed dispensary team.
CEOCFO: What surprised you as you started on this venture?
Dr. Kingsley: I certainly never foresaw when I started medical school all those years ago, that I would end up as CEO and scientific leader in the cannabis space in the US. I am surprised by how little I still know! I am surprised with how quickly things are moving on the political side, even as recently as 2015 I would not have expected Vireo to be expanding into recreational states like Massachusetts. I am surprised with how well-received our story has been. The cannabis industry is an amazing opportunity to help patients, spread awareness and really make a difference. I had no idea what I was getting into, but I am so happy I took the risk and left the Emergency Room to start Vireo. I know now, that this really is meant to be my calling. For the remainder of my productive life, I anticipate being involved in the cannabis space.
CEOCFO: When did you recognize the value of cannabis?
Dr. Kingsley: I was in a pretty good job as an ER doctor in suburban Minnesota. I distinctly remember when my mind changed. I was a product of traditional education; this led me to think of cannabis as just a recreational substance. I was pretty ambivalent, I did not judge those who used cannabis, but I did not really think it was medicine. Well that changed one night in the emergency department when I saw a Gulf War Veteran who had been shot in the back many years before while on a tour of duty. He had this back pain and muscle spasm. I gave him a large dose of IV opioids, probably enough to kill you or I, he had high tolerance because he had been dealing with chronic pain for so long.
After we got him comfortable at about 3:00 am, we got to talking and he said that he was in California and he would just smoke cannabis every day, he was on no opioids and he had very little pain. That was compelling. I asked him why he was not smoking cannabis now, and he said it was illegal in Minnesota, so he did not smoke it here. He was a straight-shooter, law-abiding, very compelling and believable guy. That was the first time I said to myself, “wow there might be real medicine here.” As an ER doctor, I was very cognizant of the opioid crisis that is ongoing. I saw first-hand drug overdoses, addiction. In the chronic pain realm, I had an epiphany - if the medical benefits of cannabis are real, we need to do something to give more people access. It is a grand undertaking to offset the damage that opioids are doing to our society.
CEOCFO: What is the reaction from the investment community?
Dr. Kingsley: I am a startup guy and am used to starting businesses with very small sums of money, but cannabis was obviously different. I naively thought that hundreds of thousands of dollars would be enough to get me there. Somehow, I convinced my wife to agree to take on this massive mortgage to build a greenhouse for a medical license in Minnesota, a license we didn’t even yet have. I realized quickly that I would need some additional funds to get things going.
I had my dad
get several people from my hometown of Harmony, Minnesota together. Harmony
is a small-town community. He got seven folks together around the fire one
night in 2014. I was hoping to raise $200 or $300 thousand that night, and
those seven people around the fire agreed to commit $1.3 million. That was
our first seed round investment. Subsequent rounds have been very well
received, so too has our initial offering on the Canadian Security Exchange
(CSE: VREO). It helps to have the science and medical backing. It is very
differentiating for the story. Investors have been very excited about our
approach to bring the best in medical, scientific, and engineering practices
to the industry.
CEOCFO: Why sets Vireo Heath apart from the crowd?
Dr. Kingsley: Vireo stands out from the crowd because our fundamental DNA is that of science, which drives pretty dramatic intellectual property and opportunities. We are fairly aggressive into terms of expansion in geographic scope and scale – as evidenced in our acquisitions in Arizona, New Mexico, and Massachusetts. However, you need to do more than just a land-grab, if you are going to be successful long-term. I think that Vireo Health has a disproportionately strong, long-term outlook over the coming five to ten years, because of this focus on science. This done not just apply to medical cannabis; it applies heavily to the health and wellness and recreational space, as well.
“Vireo Health has five full-time physicians, a wide array of scientists, and decades of scientific, medical, and engineering expertise on our diverse leadership team. That medical and scientific focus permeates Vireo’s infrastructure, products, and customer experience.”- Dr. Kyle Kingsley
Vireo Health International Inc
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