One of the largest publicly traded MSO's that still under radar Size and diversity makes multi-state-operations (MSO) an attractive cannabis investment. Bob Fireman CEO of MariMed (MRMD) joins Dan Humiston to talk about how their disciplined adherence to sound business principles helped them maintain one of the strongest balance sheets of any publicly traded cannabis company. Produce by podCONX
One of the largest publicly traded MSO's that still under radar
Size and diversity makes multi-state-operations (MSO) an attractive cannabis investment. Bob Fireman CEO of MariMed (MRMD) joins Dan Humiston to talk about how their disciplined adherence to sound business principles helped them maintain one of the strongest balance sheets of any publicly traded cannabis company.
[00:00:00] Dan Humiston: today in raising cannabis capital, we are joined by Bob fireman, president and CEO of mayor, Matt, Bob, welcome to the show.
Bob Fireman: Dan, thank you so much for having us and letting the world know more about Merriman and all the good things we're doing.
Dan Humiston: you know what you guys have been under the radar for so long and with mayor med, there's just so much to talk about. So I think maybe for today's show, we're just going to focus on the business model and then let's plan to have you back this summer to talk more about the different brands as a multi-state cannabis operator.
Merman has over 300,000 square feet of cultivation, production, and dispensary facilities. Okay. With portfolios of proprietary brands and products, brightly establish yourself as one of the leading MSOE. But what I find really interesting is the way you built a company. And that's where I want to start today.
Can you briefly explain how you transitioned from advising other cannabis companies to developing and acquiring your own [00:01:00] brands?
Bob Fireman: Absolutely. Our management team has been together over 10 years. As a serial entrepreneurial lawyer, we got exposed to the wild West of California. Back in 2008 working on a project to turn all the roofs in the city, into greenhouses to grow lettuce and New York and Boston whole foods took us out to California where Gavin Newson was.
Mayor said, let me rent you the top of the Moscone center. Long story short after we designed the 60,000 foot greenhouse on top of the Moscone center we found out that the city didn't own the Moscone center, but it was owned by a trust .
And it said no commercial operations. We moved that project back to New York and we built a 10,000 foot. A greenhouse on top of an eight story, affordable housing project in the Bronx, but my team stayed out there and they called me and all of a sudden I'm investing in a grow house in [00:02:00] Aptos, in a dispensary in San Jose.
And then when Peter Lewis enjoyed Sora, started to fund referendums to get medical marijuana on the ballots back East. My friend Larry RASCII died from COVID. . He said, Bobby, you know something about pot. You started to help with drafting registration from all the knowledge we gained in California.
And we got into it. It was to some fellows who had won a license in Providence road Island. Now back then the medical programs were competitive. They were not for profit state licensed facilities, which would stop the license or could not own any equity. There was no stock. So we built the business based on the rules, cause it was like that in California with municipal benefit corporations and not-for-profits so we we put the investments on the real estate side.
Cause there was no equity in the license and we built the business with providing investment for [00:03:00] rent percentage ramps management fees licensing fees. And sometimes interest. , so once we developed the Slater center as a team, we made it scalable and replicable, and we formed the beginning of the Merrimack and we started to bid on applications and we won licenses in Massachusetts, Maryland, Delaware, Illinois, Nevada.
That's how we built the company. I think we're different than other MSOC. Because at the time we started to morph into a public company that I was on the board of, and were going to raise capital in the public sector back in 2014. And when that didn't work because of some wild actors, we raised money on the real estate side.
So we're a little different than others in that we organically incubated all the businesses that we own and operate today. On the sides, we didn't raise money on Bay street. We walked away [00:04:00] from being one of the first RTOs we've stayed on the OTC and we've we've basically organically found the properties.
One, the licenses develop the cultivation, the production, the brands, the workflow, the expertise, the knowledge. And so we're very strong management team. We've got validated experience
Dan Humiston: I was going to jump in because I think that economy of scale that you bring to your brands gives them such an advantage over smaller brands. If that's something that I think I'd like to explore a little bit, some of the advantages of being a brand on the mirror med team versus, these smaller brands that are trying to do it on their own today.
Bob Fireman: Yeah, I think We started with the savant that wanted medical marijuana to help people and improve their health and wellness. And that's still a core trusted strategy and mission of our company. A real thing of creating formulations and understanding the different cannabis compounds [00:05:00] to create either the best genetics or the best sort of infused products that have formulations that provide the fastest and best results.
We spend a lot of time on science and innovation. Our lab guys really understand how to break down these things . And so the products are brands like Betty's Addie's and confusions are top sellers because people are enjoying the results from taking it. We always started, we want quality consistency, precision dosed, and it's the same , every time, you know, you have a martini, what happens?
Maybe you don't Dan, but. You want that to be consistent. And I think as the industry matures and some of the MSO started to bring money more into science as we get more mainstream, as we take some of the help we've given to people, whether it's episode Lepsy or a mother with anxiety or nausea.
If we can start to document that and put it into peer review medical journals this industry will [00:06:00] mature even faster than it is right
Dan Humiston: That's on the horizon and that's going to make the biggest difference. You're a publicly traded company, which you mentioned earlier, and , for our listeners. It's trading under symbol, M R M D,
Bob Fireman: Mr. Red.
Dan Humiston: Matt. I noticed that you recently initiated a $46 million financing facility.
How do you intend to use the money?
Bob Fireman: And, your show sometimes said raising capital in the cannabis industry has been a challenge. Obviously some of our companies are over leveraged and looking for capital and capital is very expensive. We finally found a group that was looking for a platform that we could grow and they didn't believe in debt.
So we made an equity deal with a group called Hadron capitalthey saw Mara Meadows, an opportunity poised for growth. Our stock completely undervalued, and we took the $46 million in 23 million of that went to pay off all our short term.
[00:07:00] And long-term debt, but for a bank financing and our one convertible note. So we absolutely cleaned up the balance sheet. And the balance of that first 23 million was todo all our cap ex. So we're expanding our canopy space to grow more flour. We've automated our equipment to do faster, more efficient cost, effective manufacturing.
We're building our GMP quality kitchens. We're expanding our lab in science, technology and innovation. So is there the balance of the 46 will be to finish our consolidation strategy? In 2020 we ran to $51 million because we've started to consolidate some of these businesses that I said earlier.
We didn't own. So we wanted to roll those businesses up into the pub coast so the financial reporting would include the top line cannabis revenue did that.
And now Illinois. And we did that in [00:08:00] Massachusetts and we ran our revenue to 51 million without even having a full year of full operations in those States, the balance of the money will bring in hopefully two or three other States. Including our Maryland the opportunity we have in Rhode Island and we're finishing in Nevada.
So when the smoke settles the revenues from those States we'll make our pot, top-line more in our bottom line, even better.
Dan Humiston: Are you going to intend to look at other companiesas acquisition targets?
Bob Fireman: Once people really, you have money in your clean.
Dan Humiston: Bye. That's why I ask.
Bob Fireman: We listen vigorous sometimes not better. We're looking at matching up with other licenses and other very good robust States where we're not. And we're talking to people all the time about acquisitions, strategic relationships. We're looking to expand our brands that are top winners in Maryland, [00:09:00] Massachusetts, Rhode Island, and bring them to other States if people share a quality and our mission and our ethics.
But I think we're poised now for immediate growth. We're poised to double our revenue this year. For the first time we gave guidance and we hope that people start to reflect that our share prices at the lowest multiple of the enterprise value of an EBIT or any other MSO in North America. And then so we need guys like you to spread the message, Dan, help us.
Why are we getting a three times multiple while our peers are 13 to 30?
Dan Humiston: Part of it is because your strategy initially, I'm sure you were quiet, you kept it under the radar and I'm sure that's, that has a lot to do with it. You guys quietly built yourself into this behemoths. And I think once people start to learn about your holdings, they're going to be, and we're going to have links to the mirror, med stock in the show notes.
And if you're a company that's maybe interested in talking about being [00:10:00] acquired or you're an investor This is a time. This is a time and the price is never going to be better. I'm sure somebody from Bob's team would be happy to speak with you. Pop we'd barely got started the day and we got to cut it off because we're running out of time, but let's plan to have you back this summer for an update and to talk more about your brands.
Bob Fireman: Thank you so much. Hope to speak to you again real soon and be safe.