Through pure coincidence, I jumped on an interview call with MariMed Inc. (MRMD; OTCQX) founder and CEO Bob Fireman on National Brownie Day, December 9, the same day the Massachusetts-based MSO announced that it had baked the world’s largest pot brownie to date, an 850-pound monster that had been lovingly and scientifically infused with 20,000 milligrams of THC. The media had a predictable feeding frenzy, of course, with the news even reaching late night TV, and Fireman was obviously pleased with the broad coverage it had garnered in celebration of the launch of MariMed’s newest brand, Bubby’s Baked.
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“We hit national television and every station here in Boston,” he said. “I think we had over a billion hits or something, some ridiculous number. So yeah, Bubby’s Baked; it’s old fashioned, chews, soft brownies, things that our mothers and grandmothers used to make. We launched its predecessor – it was a local; we named it Bourne Baking, which is next to where our factory is. Bourne is the gateway to Cape Cod, you know – and then we did some validating, testing, and improving.” The idea for the world record brownie was the brainstorm of a recent hire who had hit the ground running. “Our new chief communication officer, Howard Schacter, came to us with the brownie idea,” said Fireman. “We had no idea. Have you seen all the news?” I had and said how impressed I was with the list of ingredients used to create such a masterpiece. The success of the brownie campaign on a national level, while admittedly fresh on Fireman’s mind, was also appreciable enough for him to comment on it later in the interview. “We’re cooking on all cylinders,’ he said. “Yesterday, our big Bubby’s brownie got us more notoriety than all the previous marketing we’ve done.”
It was a comment that exemplified the theme that the time has come for MariMed to receive its due recognition as one of, if not the best-run MSO in the industry, a claim that Fireman delivers matter-of-factly and buoyed by facts. “We’re one of the few MSOs that are cash flow positive, and profitable,” he said. “We had a transformational year in 2020, where we doubled our revenue and opened up more dispensaries in Illinois and Massachusetts. We started to roll up the consulting businesses that we developed in these five states and put two of them under our public vehicle, which allowed us to report that revenue in our public reporting, and now we’re going to roll up the balance. So, what differentiates us is not only that we’re debt free and positive cash flow, but we are organically grown. All these businesses, we won the licenses in these states, we developed the real estate, we created the workforce, they’re all our standard SOPs and best practices, and so we’re really proud of what makes MariMed so different, and so strong.”
Currently, the company has been awarded 17 licenses in six states – Massachusetts, Delaware, Maryland, Illinois, Nevada, and Rhode Island – has built over 300,000 square feet of cultivation space, with more to come, and claims 276 “happy employees,” with more of those to come, too. Like most MSOs, the situation on the ground is fluid, but the company currently operates grows in Massachusetts, Delaware, Maryland, and Nevada; dispensaries in Delaware, Illinois, and Massachusetts; and has brand distribution in Delaware, Illinois, Maine, Massachusetts, Maryland, Puerto Rico, and Rhode Island. It’s brand portfolio includes MariMed brands Bubby’s Baked, Kalm Fusion, Betty’s Eddies, and Nature’s Heritage; its Hemp CBD brand is Florance; partner brands include Healer, Tikun, and binske; owned retail brands are Thrive and Panacea Wellness; and the company has managed operations with KIND Therapeutics USA and First State Compassion.
From Consulting to Cultivation and Beyond
All MSOs have unique origins, but MariMed stands out for having morphed from a business specializing in consulting and acquiring licenses into a full-fledged vertical cannabis company. “I’m sort of a serial entrepreneur attorney with decades of business experience taking new ideas and innovative products and turning them into technology promoting business solutions,” said Fireman when asked how he got into cannabis. “My family is from a sporting goods background, with fishing tackle and tennis and golf – my cousin started a company called Reebok – so we’ve been in consumer products and trying to fulfill the needs of consumers.
“One of the entrepreneurial things in my life was [when] someone brought me a business plan to put hydroponic farms on the roofs of cities to grow local food 12 months a year,” he added. “We went out to Berkeley, and I saw all the people that were committed to urban agriculture and fresh local foods for the world, and we did a friends and family [raise], and started a company called Sky Vegetables. We were going to try to do a farm here in Massachusetts, down in Brockton, and I went to Whole Foods to get their support. I think it was 2008, and they said, ‘We love this.’ It wasn’t organic; it was hydroponic, but the mood there was local, fresh, know your farmer, know where the food comes from, and they said, ‘We’re opening 26 stores in the Bay Area of San Francisco, and we would like to consider putting your farm on the roofs of the supermarkets so we could have fresh local [produce].’ I said, ‘You want me to grow lettuce in California? That’s where lettuce is from.’ They said, ‘Look, we want to do this.’
“So, we agreed to do that, and we went out [to California],” he added. “Gavin Newsom was the mayor of San Francisco back then, and his group found out that we were going to put up rooftop farms, and he decided he wanted to put a farm on top of the Moscone Convention Center. So, we proposed to lease the top of the Moscone Center garage, and I designed a 60,000 square foot hydroponic farm. [Newsom] wanted to make a statement and invited us to City Hall. He says, ‘If the bridges of San Francisco go down, there’s no food for the people.’ I said,’ Okay, Mr. Mayor, whatever you want.’ So, then we get a call from the mayor’s office. They go, ‘Mr. Fireman, we have a problem. We thought the city owned the Moscone Center, but we only manage it, and it’s in a trust for 100 years, and our lawyers say no commercial activity.’ I said, ‘I just spent 60,000 on engineering. Mr. Mayor, will you give me my money back?’ He said, ‘No, I can’t do that. I’ll give you the pier, I’ll give you this…’ I said, ‘Just give me my basketball; I want to go home.’ So, I went back, and we found a group of developers in the South Bronx in New York City, and we built a 10,000 square foot hydroponic farm on top of an eight-story affordable housing project. We started growing fresh basil and arugula that we supplied to the schools and the food bank in the city of New York, and you know, the only bad thing about that was the farm looked over Yankee Stadium, and me being a Boston Red Sox fan I hated every minute of it.”
But the cannabis connection was still lurking back in California. “What happened was, I told everyone, the party’s over, come back East, we’re not going to build this farm in San Francisco,” said Fireman. “But some of them liked California, and they said, ‘Mr. Fireman, can you help us invest; we have a grow license down south of San Francisco in Aptos.’ So, all of a sudden, my finance friend and I invested in a grow in California. And then one day, they called up and said there’s a guy who has a dispensary in San Jose, and if he doesn’t give someone the keys his wife is going to kill him. So, we ended up learning about the wild west of California, medical only, not for profit, cannabis, with a dispensary and a grow. And then, when Peter Lewis and George Soros we’re funding referendums for medical marijuana laws back East, a government relations person came to me and said, ‘Bobby, you know something about cannabis. Can you help?’ So, we got involved in drafting legislation.
“I was out in California 2008, 2009, and 2010,” he continued. “Once we started to learn about it, we started to look in Massachusetts, which was coming out with an RFP (request for proposal), and we found some friends of ours from Rhode Island that had won one of the licenses back in 2006 and 2007; there were three licensed dispensaries and a lot of the gray area and caregiver programs, and we did a friends and family, and built the Thomas C. Slater Compassion Center in Providence, which today is probably a top five seed-to-sale operation in the United States. We then took all that knowledge and started a consulting company, and started to win licenses in Massachusetts, Delaware, Maryland, Illinois, Nevada. And so, we took our best practices, and some of our friends from Rhode Island and California, and the consulting company morphed into MariMed. So, we formed MariMed formally, and some friends of ours said to go public, so we morphed into a public company in 2014. I was on the board. We put some of it in there, and in 2017, our investors said, ‘We don’t want a piece of Massachusetts or Maryland; why don’t you put it into the enterprise.’ So, in about May of 2017, we put everything into the public shell, which was called Worlds Online, we converted the name to MariMed Inc., I became the CEO, Jon Levine became the CFO, and we’ve been operating as a public OTC company since 2017, and that’s how we got into it.”
That answered the how but not the why, so I asked Fireman if he embraced cannabis because he is natural risk-taking entrepreneur who simply wanted to get in on the ground floor of a new, potentially explosive industry?
“I am a risk-taking serial entrepreneur,” he answered, “but I’ve also been passionate about causes and
people all my life, being a little bit of a political activist. I think I got enamored with the social justice of it. In California, I met these kids in the street, learning about the culture and the subculture, how they lived and died for this plant, and I started learning about all the good things that people can get relief from. When we were associated with the Slater Center, I saw mothers with epileptic children looking for CBD with pediatric oncologist, I saw how people with MS or Parkinson’s were getting symptomatic relief, and I sat in these meetings where these folks in wheelchairs would come and talk to legislators about why they needed medical marijuana, why they wanted to stop buying behind the library, and wanted this to be more mainstream. So, we got wrapped up in the passion, which is now part of the mission of MariMed.
I mean, our mission and vision and values are all about improving the health and the welfare of our customers, about making formulations and products that suit their needs and bring relief, so we work with doctors on that. We know we need to get our industry more mainstream. Ten years ago, I couldn’t talk to professors at universities that want to have cannabis programs. They would talk to me with one eye closed, and please don’t mention my name. Doctors used to come to us and say, ‘We’re supportive, but I’m affiliated with a hospital that gets a lot of federal funding.’ So, we’ve seen as it morphed from California to Colorado and some of the states back East, and we’ve seen it now grow to over 33 states, some form of legal medical or adult use, and we still see this industry [as being] in its infancy. You know, companies like us that are multistate public companies; we still share a vision to give something back, to be more inclusive. So MariMed supports diversity, equity inclusion, and we do what we can in social justice. As the industry gets bigger, we need to be more professional, we need to bring in our business acumen from other industries, and we need to develop products and services that fulfill the needs of this category. And there’s no other category that’s growing, as it gets more legal and more states with more people come online.
Organic Growth is Key
The organic aspect of MariMed’s strategy is key to its success, Fireman asserted time and again. I asked what specifically he meant by organic growth. “When we talk about being organically grown, it’s sort of what I just referenced,” he replied. “When [Canadian Prime Minister Justin] Trudeau legalized marijuana in Canada, it opened up Bay Street to be the cannabis banking capital of the world. We went up there, and we could have been the first RTO (reverse take-over) on the Canadian stock exchange, or one of the first, but we decided not to go that route. We stayed on the OTC, but I think a lot of other guys our size went up there and raised hundreds of millions of dollars to accelerate their growth by buying cannabis businesses and licenses in states all over the place, thinking bigger was better. Not only did they overpay for businesses that didn’t even exist, which hurt a lot of people that are value guys like us, but I think the challenge of assimilating different cannabis businesses, different cultures, different SOPs and technologies, and making them work, is still a challenge ahead of them for a lot of them because they continue to do so.
“So, I’m proud to say we developed all our businesses from the ground up,” he added. “We won the licenses, developed the real estate, put in our own technology, our own systems, our own payment systems, and we now are expanding. We took on some equity in March of this year, and paid off all our debt, so I’m really happy to say we’re debt free, with positive cash flow and a tremendous management team. We’ve developed our Betty’s Eddie’s, our Kalm Fusion, and now Bubby’s Baked, and a few other brands are coming out. We put love and energy into our brands, and those brands are the top-selling brand in every market that we’re in. Our flower is craft buds at scale, also top-selling flower in every market that we’re vertical, and now we want to expand that platform.
“So, I think we’re poised for growth,” he continued. “We’re a little concerned that our stock is undervalued compared to our peers, but part of it is [because] I don’t think we’ve done a great job messaging our conversion from a consulting advisory company that we set up back when you couldn’t own the licenses – so we put our investors into the real estate as landlords, and most of the money coming into MariMed was from percentage rents and licensing fees and management fees – but as we consolidate these into the pubco, like we have with Illinois and Massachusetts, our $50 million revenue in 2020, we predicted over $100 million in 2021 with $30 million in EBITDA, and we upped our guidance to $118 and $42 million in adjusted EBITDA, making us one of the highest-margin companies, the most profitable companies, and we will continue organically to double our earnings and profits and revenue each year.”
He was on a roll I was not about to stop. “We also are about to expand our branding into other states, either through buying production licenses or licensing with people that share our vision, and test for quality and consistency,” said Fireman. “We’re also looking to acquire new licenses either by application process – which we just did in Ohio, and we’ll do in New Jersey, and hopefully soon in Connecticut and New York – or we’re looking to acquire or merge with SSOs [single state operators] in certain key states, where entrepreneurs have done something similar to what we’ve done ourselves and want to be under the umbrella of a bigger company that is more professionally run, and they can focus on their core competencies, and being a company that has capital, brands, and is involved in everything, like we are.
“We’re cooking on all cylinders,” he added. “Yesterday, our big Bubby’s brownie got us more notoriety than all the previous marketing we’ve done. But I think on top of this, we’re improving our bench strength. Obviously, we hired a new VP of investor relations. We’ve hired a new chief communication officer. We just got analyst coverage from one, and I’m hearing that two or three more cannabis analysts will be taking up our stock. We’re contemplating dual listing to get more liquidity in our stock, and we’re going to be making hopefully some big announcements in the coming months that will increase our revenue and our strength. Benzinga used to call us the best-kept secret in the cannabis industry. Well, we don’t want to be the best-kept secret anymore, so me talking to folks like yourself and getting the messaging out is part of our strategy to let the world know that MariMed is one of top, best-managed companies in the cannabis industry.”
Bringing It All In
This also is a period of reorganization for MariMed, a process that Fireman said should only reinforce what makes the company special in the first place. “There is no one right way of providing shareholder profits, but our company is different because we have a validated management team that’s been together for over 10 years, and nobody has that,” he said. “We took the best-of-breed of quality and products and built our own proprietary strains and tissue cultures and infused products, and our own recipes, our best practices, our own SOPs. That makes us unique. We’ve been successful doing it ourselves. We organically grew all our businesses and hired our sales teams and trained them, so we assimilate different cultures and different peoples. I think when we talk about culture, the people that walk into our companies and our facilities are amazed at the family friendship we have with people that work in our company.
“We’re going through a strategic reorg, as I said earlier,” he continued. “We’re hiring more professional people in our C-suite. We created a program of rewarding our people based on the company, and goals is not just about making numbers, but about finding careers and paths through our company. So, we’re in the process of doing that. We’ve just issued our new mission, vision, and values, so I think what makes MariMed unique is that we’re really organically grown. We have a culture of people that are happy to work here, and we put our heart and soul into our brands to help them fulfill the needs of our customers, whether you’re a person with MS or Parkinson’s, or someone looking for relief from nausea, or sleep deprivation, or anxiety, we care about what we do, and we’re not big. Even though we’re a public MSO, people think we look more like a family-owned businesses, and even as we have hundreds of employees, we try to keep that consistent thing through all our management. So, I think we’re different in that way, and we hope to continue to make people feel a part of this, because your company is only as good as the people that are in it. Our mission is to our own employees, to our customers, and to the consistent quality that we bring to the market.”
As our conversation wound down, I asked Fireman about how he thinks cannabis will play out, as the Starbucks model, available only in licensed shops, or the tobacco model, available literally everywhere. “Well, you know, we all lived through COVID and a couple years of hell, which continues,” he said. “We were lucky that the states felt we were an essential industry, so while we tried to protect the health and welfare of our clients and our employees, we expanded things, some of which was home delivery, curbside pickup, direct-to-consumer, stuff that would have taken years to do that I think got accelerated by the needs of patients who didn’t want to come into retail stores. MariMed had a lot of history in the CBD direct-to-consumer business, so we understand those things. California is a country unto itself, so creating those different models state-to-state is a challenge. We believe legalization will have to protect the industries in the states that they created, the hundreds of millions of dollars that went into them. Whether it’s Massachusetts or Illinois, when federal legalization ultimately comes, it needs to protect the businesses that helped create the industry.
“So, things will get harder, margins will go down. I think we’re comfortable no matter what happens, because we’re a no-frills organization; we’re profitable and we have the highest margins of anyone in the industry. We need to maintain that, because more people will come into the industry, competition will get tougher, and when it is legal and our competition is called Kraft or Coca Cola, we will need to be able to maintain our brands, and our space, and be a resource for these new people to learn, because this is complicated. To replace what our knowledge is over 10 years, our brands, our products, our licenses, would be a major task for anyone to replicate, so we’re poised for growth, and we’re going to get bigger and better whatever the future brings. Whether legalization happens or not, we’re poised to work within it as long as it’s the best thing for our stockholders, our patients, and what’s best for the country. The end of prohibition is going to be a great thing for the cannabis industry, and we’re going to be there sharing in it.”
And in terms of sheer numbers, Fireman said MariMed will easily be able to deliver on promised growth. “We got a $26 million financial infusion in March,” he said. “We paid off all our debt, and we invested about $8 million of that into Capex to upgrade our equipment, automate our equipment, and expand our facilities. We have $23 million left on that deal. We’re also cashflow positive, with no debt. I think we were showing $25 million in free cash on our books at third quarter. So, we have reserves, and we have all the money we need to execute on our strategic growth plan to expand in the States, and our licensing stuff. We have no need of capital unless something extraordinary comes along that was accretive. But believe me, for us to get off our path, something would have to be very good and very creative for our stockholders.”
Fireman likes the current path MariMed is on, even though he wants that path to no longer be an industry secret. It’s time for MariMed to have its day in the sun.” That’s what we want to do, and that’s why we’re grateful to people like yourself,” he said. “I mean, we have the lowest multiple of any MSO. We believe we’re the most undervalued stock on the board, and we just think if we can continually do our revenue earnings, and get our messaging out there, that that will change dramatically for our shareholders.”
I said it sounded to me like he believes MariMed, as a tech company, belongs on the NASDAQ. “Yes, absolutely,” he replied. “I’ve been talking to NASDAQ for five years, and somehow this federal prohibition stops a lot of things in New York.”
But as was proven with the world’s biggest pot brownie, Fireman is ready to deliver MariMed’s products to a world almost ready to receive them. “We’ve done hundreds of thousands of dollars’ worth of brand strategy and research,” he explained. “We come up with a brand strategy, limit it to two pages, we have a rollout strategy, and we’ll be doing that for four to six brands. It involves new packaging, new consumer messaging, all tied to our core values and fulfilling people’s needs. We now are investing millions of dollars into that, and it will be scalable and replicable. So, as we test market something here in Massachusetts, Maryland, or Illinois, we’ll have all the media and all the ads, whether it’s digital or conventional, ready to roll into every state that we’re going into. It’s money. You know, you’re talking to a guy that’s a business guy, and I say to these marketing guys, our stuff is so good and so well received, I’m selling every ounce, every eighth, every product I can produce. So why do I need to spend your media money? And the answer is that it will get more competitive, and customers need to see our name and brand out there. They need to know that we are top quality, and that’s why we need to continue to get the message out.”
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