"From Maryland to Ohio: Story Cannabis' Expanding Footprint" Jason Vedadi, CEO of Story Cannabis, joins Dan Humiston to discuss the company's impressive growth in the cannabis industry. Story Cannabis is a young company rapidly expanding in the MSO (Multi-State Operator) space, operating in Maryland, Ohio, and planning to enter New Jersey. Jason highlighted their focus on winning licenses, potential benefits from cannabis rescheduling, and their ongoing capital-raising efforts for expansion. Produced by PodConx
"From Maryland to Ohio: Story Cannabis' Expanding Footprint"
Jason Vedadi, CEO of Story Cannabis, joins Dan Humiston to discuss the company's impressive growth in the cannabis industry. Story Cannabis is a young company rapidly expanding in the MSO (Multi-State Operator) space, operating in Maryland, Ohio, and planning to enter New Jersey. Jason highlighted their focus on winning licenses, potential benefits from cannabis rescheduling, and their ongoing capital-raising efforts for expansion.
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Story Cannabis - https://storycannabis.com/
Jason Vedadi - https://www.linkedin.com/in/jason-vedadi-949979159/
Recorded on Squadcast - https://squadcast.fm/
[00:00:00]
Today on the MJ Bulls Raising Cannabis Capital Podcast, we are joined by Jason Vidadi, the CEO of Story Cannabis. Jason, welcome to the show.
Yep. Thanks.
Well, I'm glad you could join us today. This is actually really exciting for me because your experience in the cannabis industry is. Listeners are going to find out shortly.
You've been at the epicenter of MSO activity for so many years and whether you've been involved in funding a company or acquiring companies or merging companies or selling MSOs, there's really not many people in the industry that I can come up it can rival your experience , in this sector of the industry.
And you've done it kind of quiet. You're not out there with a lot of fanfare, but you've done it quietly. And I mean, we could do two or three shows just on your experience, but in the interest of time, I, today, I want to focus more on your present than your past.
And I thought maybe we, we could kick this off. And [00:01:00] talk about story. It's relatively a young company, but despite being young, it's one of the fastest growing MSLs in the country. And, maybe give us the quick story to get things started.
Yeah. We've been at it about a couple of years now and we started in Maryland. So we've got a full vertical there and that just went wreck. So. We got a good windfall and a very, I would say, difficult climate at the very least for cannabis. We bought a business back that we had sold between our harvest exit and story, which was called Oasis.
We bought that back from Air Strategies. We got back in that market and realized that three retails really wasn't enough. That the consolidation that has been taking place there. Made it more difficult. So we soon got ourselves. We have 11 stores there now so we consolidated quite a bit and we feel like that's enough to kind of keep us competitive.
We're [00:02:00] operational in Ohio. We have We've got some stores open there. Our goal is to kind of get to four, which is max. We're hoping that we see REC pass in November. We're optimistic that's going to take place. And we're also going to be working on some retail store in in New Jersey as well.
So that's four. And our core competency of the company is really we've pretty competitive applying for licenses historically. And so we applied in Texas and we're lobbying in North Carolina and we'll kind of keep navigating through that process and keep looking for opportunistic type of, assets to purchase as we keep going through the process, but we've learned a lot.
And so we're, I would say a little more target practice than shotgun spray at this point.
Yeah, . It seems like a lot of your growth has been fueled by identifying these undervalued assets. Is that going to be sort of the strategy moving forward?
Yeah. I would say like first strategy would be win it, cause there's, [00:03:00] that's the highest and most accretive thing you can do. And then obviously there's legacy markets. That are, down the road, whether they be just returning medical late kind of cycle, medical and Iraq or full recreational, we'd rather see a mature medical market and move into a rec market because there's that event that takes place between medical and rec.
So we'll focus there, but I wouldn't say anything's. An elimination we will, I mean, at this point, there's no reason to go in the markets. They're an oligopolistic, right? Like, I don't mean just, I don't think if you gave us assets in Oregon or California that we'd go do that or operate them at this point.
Just doesn't make financial sense. And the playbook is kind of out there. I mean, I'm not saying anything that anybody doesn't already know. There's, probably a dozen states that are, much better economic option opportunity than the, than some of the latter, the West coast has been very liberal.
And another thing that we try to stay away from our markets where the regulator just doesn't care. And so, if you have to deal with [00:04:00] illicit operators, not paying tax, competing with someone following regulatory process and paying tax, I mean, that makes it fundamentally impossible to compete.
Yeah. Yeah. I see that in California. A lot of companies unfairly are being pushed out by the unregulated markets. It's really unfortunate. . You've had experience with publicly traded companies but story is a private company at this time in the industry, do you feel like you have an advantage as a privately held company?
Yeah, I most certainly do. I do, there are some advantages to being public. Having Liquidity in your stock, for instance, you have an advantage a lot of times with sellers, but right now stocks kind of being a depressed values doesn't really allow those public companies use their stocks at this exact moment.
I don't see really any advantages to being public as a private company, we're much less regulated from the perspective when I'm quarterly [00:05:00] earnings reports, right there. They're Canadian publicly traded companies operate in the United States that cross border issues, cross tax issues. Their legal bill is going to be higher.
I mean, their accounting bills are much higher. I mean, the operating expenses are much higher, even more typical than a typical public company. But the, they're the 1 advantage I'd say is that there are, kind of 4 or 5 publicly traded companies that look like as. You see reform kind of take over will kind of be your pepsi coke per se, however you want to look at the larger companies.
I think those ones that have that kind of a lead Are in a very interesting position as long as they can kind of hang on and we do get incremental reform But myself like running a cannabis business right now. I'd much rather be running a private company
Yeah, no doubt about it. And I think you can move quicker when you have opportunities , like the Oasis deal, because , there's not all the. bureaucracy that's associated with a publicly traded company. , you mentioned [00:06:00] regulations and I know there's a lot of speculation that, may get rescheduled.
I suspect that would be a real nice benefit if it was to , be rescheduled from schedule one to schedule three. Tell us how that would impact your business.
Yeah, so I mean if you go back I think it was a year ago right now, it was the Biden administration announced rescheduling, the process would start. And I think everybody's a little skeptical, cause it came out really hot and then you don't hear anything for a while. And then the health secretary came out.
So it honestly feels like the industry just is like kind of see it to believe it, but that has kind of taken process due process the way it was supposed to. So I think people are just so negative on the industry that until it actually physically reschedules, no one's going to happen. But it has the greatest impact out of any legislation or banking or anything.
It's like kind of moving through the process now because essentially get [00:07:00] rid of two 80, right? So the companies can take standardized deductions and. In our case, it would add, if just like try to simplify the math, we're doing 10 million of free cash would probably take us to more like 15 to 17 million of free cash.
So it's, it's a quite a dramatic hit. And then, depending on the structure of the businesses, we're not. We don't have as much debt as maybe some of the legacy operators, but I think they'd have even a more positive impact because they can't even deduct their interest expense on their debt.
So all of a sudden, all that debt becomes interest expense. They can deduct. And, if you kind of look at these operators, whoever's got kind of the heaviest retail. Revenue forecasting or historicals, they're going to see the most benefit. So the wholesaler won't quite see as much of a benefit, but whoever has kind of the most retail revenue will see the most benefit.
But I mean,. It'll create a more competitive landscape, I think for debt. I think we'll [00:08:00] see more debt opportunities in the space. We'll see more people coming in the credit side. And I think you'll see a whole bunch of businesses not fail.
I think if it doesn't happen and 280E kind of holds its ground and the industry has to continue to face it, I think the default rates will be immense. So I think it's a safe Haven for a whole bunch of people. And I think there's some people prepared for it and have always kind of forecasted nothing going right.
And that's kind of how we're running our business now. We assume nothing's going to go right. For purposes of survival or creating kind of profit, or we view 280E as an expensive tax that we have to live with in our business. And so we literally underwrite when we're trying to buy something that we have to be able to produce a profit with that tax.
But I'm cautiously optimistic. I was looking at this the other day, but if it's a politically motivated strategy to get the young vote out. In 2024 by rescheduling [00:09:00] cannabis because you're not going to get full blown legalization through the House and the Senate. The way I look at this is that, the health secretary generally publishes it 110 day, 110 days later on average at DEA response.
There's a 60 day timeline for comments and then it starts moving through the process. You kind of think they want to get banged for the buck by next November. It leads me to believe that sometime between now and the beginning of February that we'll see the DEA come out with their letter of recommendation for schedule
man, I hope you're right, I hope you're right. I think it also gives you a huge not advantage, but at least puts you on equal footing with the illicit market, because then , you're not unfairly taxed. And they're in competing with someone that's not being unfairly taxed.
, we're cutting it close on time, but I'm sure a lot of our listeners are curious about opportunities to potentially invest in your company or participate in your growth. Will there be any opportunities , for investors to take part of what's going on with this opportunity?[00:10:00]
We'll keep raising 10 to 20 million at a time until we see some consolidation or an opportunity to exit and we'll just keep buying one more deal at a time. We'll just keep doing that. We're not, looking at any mega mergers or selling the business right now, but. We have closed two deals this year.
And so we're currently on a raise to raise enough capital to do another one. And we're just going to continue that process.
Okay. Well, that's encouraging. And I'm sure our listeners will be interested to learn more about the opportunity. I'll have links in the show notes. So if anybody wants to touch base with Jason, just click the show notes and talk to him about, where they're going, some more, maybe a little more detail as to your future.
But Jason, I really appreciate you being on the show today. This is It's interesting learning about your business. And I think we should try to schedule another interview so we can maybe talk a little bit more about the industry in a whole and where you'd see it going, that would be fun.[00:11:00]
Sounds good. I appreciate it.