Article by Jameson Berkow, Globe and Mail
Steve Gutterman considers himself “such a lightweight” as a cannabis user, but the president of Harvest Health and Recreation has heavyweight ambitions to turn his company into the next “Monsanto or Diageo” of legal marijuana. In a wide-ranging conversation with Cannabis Professional, Mr. Gutterman addressed the challenges of operating in 15 different American states as “separate fiefdoms” and how new federal laws might dramatically alter that structure. He boasted of a “massive cash war chest” approaching US$1-billion, an M&A pipeline “that is quite full” and said Harvest would “always evaluate the opportunity” to move its public listing from the Canadian Securities Exchange if U.S. law allows. The full conversation, lightly edited for length and clarity, is reproduced below..Cannabis Professional: You come from the Ivy League, degrees in law and business from Columbia and a background in finance. What was your path to legal pot?.Steve Gutterman: I actually don’t enjoy it. I am such a lightweight. I can have like 5 or 10 milligrams of anything and that just puts me under the table. Such a lightweight..CP: You don’t really enjoy your own product then?.SG: No, I do, I do. That was the wrong word. And I have certainly learned to enjoy it more in the last year or so [laughter]. There is lots of stuff that helps with sleep, but I was not a large user and I’m still not. But to answer your question, for me, I’ve spent 24 years in various industries and what I will tell you after having pushed a lot of products in a lot of industries it is a lot more fun to be on the right side of the trends. I started my career selling online financial services at E-Trade and it was incredible. What we found out… by the mid 2000s was, at least for the distribution of financial services, the internet was by far the best system ever created. We were on the right side of the trend, it was fantastic. I remember looking around and saying to the team our job was just not to screw it up, we just had to manage this growth. Selling weed to millenials and people in pain and people who just want it? Right side of the trend..
….CP: You said it is already too late to start a company that can be among the ‘winners’, but there already are hundreds of multi-state operators – or maybe even more at this point – with very similar business models to yours, many with a comparable level of scale and previous high-growth industry experience. How do you convince investors Harvest specifically is the next Diageo or Monsanto as you said?.SG: The data would suggest, just given our market cap, our ability to raise money, our profitability, our revenue, that we’ve already got some data to suggest this is not a theory..Our track record is that we really are the best people in the country at winning licenses. That is just data. I’ll give you a good example. Recently we won six licenses to go along with the one license we had in Pennsylvania, we are the only company in the country that won licenses in every district in Pennsylvania so we are going to have 21 dispensaries there..CP: What happens to all those separate fiefdoms once federal laws change and you no longer need to have so many assets in so many states, do you have a consolidation plan?.SG: I think [American federal legalization] is going to come in phases. I think the STATES Act is going to pass this year and that is going to be very helpful for us. It is going to make banking easier and probably allow capital to flow in and it is probably going to create some other opportunities but states are still going to be operating independently. The actual game changer is not until cannabis is taken off of schedule one [of the Controlled Substances Act].