A judge has ordered Illinois officials not to rescore cannabis dispensary applications in an ongoing licensing dispute over the state’s plan to issue 75 new retail licenses, according to the Chicago Tribune.
The move comes after three finalists included in the licensing lottery filed a lawsuit over Gov. J.B. Pritzker’s plan to offer unsuccessful retail applicants a second chance to qualify for the controversial lottery.
Illinois regulators announced in September that 21 social equity applicants would be included in a lottery to win the 75 available dispensary licenses.
After a group of companies behind some of the unsuccessful bids filed a federal lawsuit claiming that there was political motivation behind the number of businesses included in the lottery, Pritzker announced that unsuccessful applicants who did not receive perfect scores on their initial applications could amend and resubmit them, or ask the state to re-score them if they believed a mistake was made during the initial scoring process.
SB IL, Vertical Management and GRI Holdings IL, which all received perfect scores on their initial applications and qualified for the licensing lottery, then asked the Illinois Supreme Court to award the licenses without the changes to the process.
The plaintiffs filed the lawsuit in lower court last week after the Illinois Supreme Court declined to hear the case, the Chicago Tribune reported.
SB IL, Vertical Management and GRI Holdings IL argue that the state’s delay in awarding the licenses is unfair and illegal, according to the news outlet, and they are asking the court for a temporary injunction and a permanent court order to force state officials to award the dispensary licenses in the lottery as originally planned.
Headshot courtesy of Christopher Melillo
The Interview: Catching Up with Christopher Melillo, Ascend Wellness Holdings’ New Chief Revenue Officer
In this exclusive conversation with Cannabis Business Times and Cannabis Dispensary, Melillo discusses his move from multi-state operator Curaleaf, his goals for Ascend, how an adult-use market in New Jersey would shift the cannabis landscape, and more.
In September, Christopher Melillo—who spent the past two years as senior vice president of retail at the multi-state, vertically integrated cannabis operator Curaleaf—made the leap to join Ascend Wellness Holdings, a multi-state operator with cultivation, processing and retail licenses and multiple brands on the East Coast and in the Midwest, as the company’s chief revenue officer.
Melillo, who has a 25-plus year track record in retail, including leadership positions at Nike, VILLA, Home Depot and PetSmart, shared with Cannabis Business Times and Cannabis Dispensary the impetus behind the recent move, as well as what he looks for in building great teams, the potential outlook of New Jersey adult-use legalization, and more.
Editor’s note: This interview has been edited for length, style and clarity.
Cassie Neiden:You were a top retail executive at Curaleaf, helping build that company into one of the biggest in the country in terms of footprint in the cannabis industry. So what enticed you to bring your talents to Ascend Wellness?
Christopher Melillo: First and foremost, the time at Curaleaf was an amazing opportunity for me. And we really did get to build an impressive team as well as an impressive footprint across the cannabis space in the United States. [I’m] proud of the work we were able to accomplish at Curaleaf, but with that came some opportunities. As I talked to Ascend, [an opportunity] for a chief revenue officer came open. They continue to go down their path for expansion, and being able to take a higher role and run multiple divisions within the organization was a very attractive opportunity to me. Running retail, wholesale, marketing as well as design/construction, new store expansion. It’s just a more well-rounded view. Most of which I was doing at Curaleaf anyway, just at a higher title in the C suite. I have a proven track record and I think we’ll see a lot of success.
Neiden:What are some of those strategic initiatives throughout the company that you hope to employ in this new position, especially in so many of these different facets, like you mentioned?
Melillo: It’s about building the right team in each silo of the business. So it’s standing up a strong retail team to better serve our customers in a different time in retailing around COVID. Second is building a team around wholesale and creating the relationships in the cannabis market. Obviously we all rely on each other in all these states, all the MSOs [multi-state operators], so therefore it’s about building out a strong wholesale division and creating those relationships. And then it’s about marketing toward the consumer base, both marketing internally, inside of our own four walls, and then building out our marketing programming with our wholesale partners to be able to sell and trade products with our other MSO partners. So I think it’s really a strategic look at the landscape and saying, “All right, where are we today, where do we want to be, what are the products to get there, what are the locations we need to get there, and what’s the holistic commercialization to bring us to where we need to be?” So those are the three pillars: retail, wholesale and marketing, that will really drive revenue for this organization, supported by great locations and great buildings through our construction and design.
Neiden: What are some of the challenges of achieving those goals when you’re operating in different states?
Melillo: I think it’s important to understand that we operate in four states [Michigan, Ohio, New Jersey, and Illinois] and one soon-to-be operational in Massachusetts. So I look at this as a four-state marketplace right now. [We] have to stay local to what is important in that local community, yet there needs to be some percentage of a national footprint. You definitely want to still have an imprint of Ascend as an organization. So I think it’s balancing those two while focusing on the hyper-local at retail.
Neiden: What are some of those ways that you focus on hyper-local at retail?
Melillo: First is hiring from within the marketplace, people that know the marketplace. Second is immersing yourself in that marketplace. No two states operate the same, and even subsidies within the states operate [differently]—so it’s really having subject matter experts in those [marketplaces] and collecting the feedback from both consumers as well as employees of what’s important in those marketplaces, listening to your teams, and then building your strategies of what’s important to each individual. It’s not a one-size-fits-all. It’s very, very different, and unique in each state with the different regulations, so you have to play both locally as well as within the state regulations. But I think ultimately it comes down to understanding what your consumer wants in those markets.
Neiden: What are some of those big market differences and how do you address those? For example, your Michigan operation versus your soon-to-come Massachusetts operation.
Melillo: The ultimate goal here is to build loyalty in each and every store or dispensary we operate in, and you build loyalty through understanding your consumer, making data-driven decisions, understanding the price elasticity in each of those markets, and understanding what the needs are. I think it’s more important than understanding the difference between Michigan and Massachusetts—which [are] vastly different from a price structure, from an economic structure, from a consumer base—but really understanding inside each one of those operating units. What’s driving the business and what appeals to [local customers]? And getting to those solutions through the data that they’ve already given you.
Neiden: You mentioned the idea of developing relationships with other operators and closing the loop on the wholesale side of the business. What are some of the keys to building those strong relationships and the “rising-tide-raises-all-boats” idea there?
Melillo: What’s important in the wholesale market and the relationship building is understanding the needs of all companies. We can all help each other build a successful cannabis industry. I don’t look at it as we’re competing against each other. I think we’re working in concert with one another because I think at the end of the day, we’re going to be able to supply product that [other companies] need; they’re going to supply products that we need. Our locations are not right on top of one another in many of our states, so we’ll be able to offer a competitive assortment. We can all win together is how I see this. I don’t see this as a super competitive “us versus other MSOs.” It’s about creating relationships where we understand their needs and they understand ours, and trading appropriately within those needs.
Neiden: Obviously there’s a huge election in New Jersey with adult-use legalization on the line, and Ascend has a presence in the state already. How are you positioned in this market and what are your predictions for adult-use legalization in the state?
Melillo: I’d first like to say we’re super excited about our move into New Jersey with Ascend. We’ve got one operating location in Montclair now and a couple of other locations coming online very soon, probably by the beginning of the year. It is a very successful medical market, both [for] my prior company as well as my current company. New Jersey has done a phenomenal job of creating the regulations, revisiting those regulations and creating a very advantageous market for the cannabis patient. So we could continue to operate the status quo and be very successful.
Ascend Wellness Holdings uses pin-debit solutions at its dispensaries to simplify its cash transactions.
If I could make a bold prediction, I wouldn’t be in cannabis any longer—I’d be in Vegas if I knew how the outcome was going to be. That said I think the current polling shows that it’s a very favorable vote. People in the state of New Jersey are in favor of adult-use cannabis. We’ll see how that shakes out at the polls; however, I think if it does go to adult-use, many towns and cities within New Jersey have to make critical decisions to continue to move this forward. I also think that if New Jersey does happen to elect adult-use legal within the state, it also puts a unique situation in front of bordering states like Pennsylvania, New York, Connecticut, in a similar fashion with what happened in Massachusetts. So it changes the cannabis use landscape in the Northeast, and I think it will continue to have a significant impact if voted in this November.
Neiden:Retail customer service tools that make payments and product selection easier, which are custom in other major consumer markets you’ve operated in, are lacking in the cannabis industry because of the regulatory restrictions. While COVID has loosened up some restrictions, how do you anticipate things changing, especially with more support for legalization with the public and in Congress?
Melillo: We’ve been able to instate hand-held ATMs in cannabis. We have them here at Ascend, which is basically a pin-debit solution. The pin-debit solution is identical to an ATM transaction, which is really a cash withdrawal off of your debit card. You no longer have to go to a separate ATM and take out cash.
We still do not have access to using credit cards, which would obviously alleviate some of the pressures as you mentioned; however, it’s hard to know what the federal government is going to approve and not approve in the near future. [We] continue to be federally compliant at the dispensaries and continue to make sure that we’re pushing the envelope on any legal possibility through web transactions as well as in store transactions.
We like the [current] solution. We know it’s not the end-all-be-all to commerce, especially when you think about from an e-commerce perspective. You want to be able to use credit cards in an e-commerce transaction. This has been heightened with no-touch solutions for curbside pickup with COVID; however, it’s not a tool we have yet. We will get it at some point.
Neiden: What were some of the successes that you’ve realized in other markets and industries when it comes to building a great team? We had mentioned earlier hiring people within those marketplaces who understand the demographic and area, but what are some of those other facets of building a team and fostering culture that brings them longevity and growth within the company?
Melillo: A lot of the things we’re adopting in cannabis have been known in retail and in general business for years, which [are]: build a great team, treat them well, continue to foster an environment that’s positive, look at improving your staff and growing from within. I think that’s super important. In a new industry and fairly new company, we have a lot of opportunity [for people] to grow. We also have to mix in people with industry experience in order to grow. So it’s finding the right balance of internal growth and external hiring to create the perfect mix to continue to propel this company forward.
Expertise comes from all different facets of the industry—whether it be CPG, wholesale, marketing, manufacturing, operations, finance—you can find great talent in almost any corner of the hiring markets; however, understanding the cannabis market is very, very different. It’s a very different skill set. I think a lot of people are interested in breaking into cannabis in their careers, so it’s sorting through who’s the right fit for your organization.
And ultimately that’s no different from anything I’ve done in the past, which is building great teams [by] putting a fit assessment in first, which [analyzes]: Do they fit in with my current culture? I always ask myself, “Would I mind working for the person I’m about to hire?” Whether they work for you or you work for them, it should feel right.
Neiden: There can be lots of turnover in this industry, so what is the type of culture that you hope to foster? If you could choose three or four words to describe it, what would those be?
Melillo: The first thing that comes to mind in cannabis is competitive. When you’re in a hyper-growth market, generally competitive attitudes will continue to push that market forward. You could be happy with your results today or you could realize those results could double because this industry is so new, our company is so new, we have so much upside.
I think compassionate to the people who have wanted this industry to be mainstream so long—understanding that this is a new industry and so many people are exploring cannabis for the first time, so I think there has to be a level of compassion and training [for] our patients.
You have to be a problem-solver/self-propelled. This industry throws challenges at you every day, multiple times per day. The landscape is constantly shifting underneath you, and you have to be super adaptable, so maybe adaptable is the right word. That’s probably a very important asset for people who have been successful in cannabis so far.
And the last one is pace. When I say pace, I mean there’s an energy and a speed at which this industry runs, which is not for the faint of heart. It is definitely a fast-paced environment. I don’t expect this of everybody, but in my world there aren’t too many times you’re off. You’re constantly on because the industry is constantly moving and decisions are needing to be made quickly. There’s a pace that could not be a fit for some people and others will absolutely excel if [they] like high-paced, high-energy.
Neiden: Anything that I’ve left out that you’d like to share?
Melillo: [I’m] early in my new journey. I’m still evaluating and assessing a lot of what is currently in front of me and where we need to go [and] building some further reaches of that strategy. At the end of the day, it’s fairly simple: We’re in a very fast-growing industry. Our job is [to] build the infrastructure in order to withstand that growth. And [for me], constantly thinking, “How do you double the business, how do you double the business?” That’s constantly my benchmark, because I think we’re still in the infant stages of the company, and I see so much growth potential in front of us. It’s my focus right now, at three to four weeks on the job. I’ll continue to build out the strategy, and you should check in over the months to come.
Curaleaf's Select Brand Expands Into Illinois
Illinois is the 15th state to carry Select Oil brand products.
WAKEFIELD, Mass., Oct. 29, 2020 -- PRESS RELEASE -- Curaleaf Holdings, Inc., a vertically integrated cannabis operator in the United States, has announced that it has expanded its award-winning line of Select Oil brand products to its 15th state, Illinois--the nation's second-largest adult-use market after California--starting with its Select Elite Live cannabis oil cartridges.
Select is a lifestyle brand that was acquired by Curaleaf in February 2020. Select creates a variety of high-quality products that can be found in over a thousand dispensaries across 15 states, including Arizona, California, Colorado, Connecticut, Florida, Illinois, Maryland, Michigan, Nevada, New York, Ohio, Oklahoma, Oregon, Massachusetts and Maine. Select takes pride in having some of the most stringent and progressive testing practices in the industry and is committed to continuous innovation to ensure its customers get the best cannabis experience possible.
Select Elite Live combines high-quality, high-potency THC oil with live resin extract derived from fresh, frozen flower. Created with a proprietary formula, Elite Live is designed to capture the essence of the living plant with a higher terpene content when compared to a traditional distillate cartridge. The enhanced formula has quickly become a best-seller in every market where it has launched; in Florida alone, sales surpassed $1 million in less than one month. The oil is delivered by Select's unique cartridge technology, which helps to evenly distribute heat and deliver enhanced purity, flavor, and quality.
"The Select brand has worked diligently to earn its place as an industry leader and is rapidly becoming the first nationally-recognized cannabis brand," said Joe Bayern, president at Curaleaf. "Illinois is one of the largest adult-use cannabis markets in the country and one that has worked incredibly hard to address the need for reparation and normalization of our industry. We look forward to becoming part of the Illinois community, and serving the patients and consumers with the best in class cannabis consumer products available anywhere."
In July 2020, Curaleaf closed on its acquisition of Grassroots, giving the company the opportunity to continue developing innovative products and serving communities across the United States, including Grassroots' native state of Illinois. Select is slated to expand into Pennsylvania early next month. Both Illinois and Pennsylvania are among the largest and fastest-growing cannabis markets in the United States.
The Illinois Department of Revenue (IDOR) recently reported that, following the legalization of adult-use cannabis in the state on Jan. 1, marijuana sales have been record-breaking month-over-month, contributing to the $100 million milestone of cannabis tax revenue collected.
Select products will be available at many of Illinois' leading dispensaries, including Greenhouse's retail locations in Deerfield, Litchfield, Morris, Mokena and Skokie, which will fall under the Curaleaf umbrella and branding pending final regulatory approval.
Africa Studio | Adobe Stock
Mississippi Mayor Challenges State’s Medical Cannabis Measure
Madison Mayor Mary Hawkins Butler has challenged the petition process that qualified one of the state’s two medical cannabis legalization proposals for the ballot in Mississippi Supreme Court.
A Mississippi mayor is challenging one of the state’s two medical cannabis ballot measures with the state supreme court, according to an AP News report.
Madison Mayor Mary Hawkins Butler filed the complaint Oct. 27, just one week before Election Day, to challenge the petition process that qualified Initiative 65 for the ballot, the news outlet reported.
Butler alleges that the number of signatures gathered does not meet standards set in the state’s constitution, according to AP News, but Mississippians for Compassionate Care, the supporters of Initiative 65, have said that their petition process met not only the requirements set by the constitution, but also those established by a 2009 attorney general’s opinion.
“The Secretary of State properly qualified Initiative 65 under the same constitutional procedures used for every other successful voter initiative,” Jamie Grantham, a spokeswoman for Mississippians for Compassionate Care, told the news outlet. “The lawsuit from the City of Madison is meritless.”
The Mississippi initiative process mandates that petitioners can gather no more than one-fifth of the required number of signatures from any one congressional district, AP News reported.
In 2009, the Mississippi attorney general’s office issued a legal opinion that the secretary of state should require an equal number of signatures from each of the state’s original five congressional districts, which were decreased to four after the 200 census, AP New reported.
In her complaint, Butler argues that it is “a mathematical certainty” that more than one-fifth of the signatures to qualify Initiative 65 for the ballot came from at least one of the state’s four congressional districts, according to the news outlet.
State legislators have introduced a competing medical cannabis measure, Alternative 65A, which is also set to appear on Mississippi’s ballot next week.
rawpixel.com | Adobe Stock
Cannabis Legalization Polls Show Promising Results Ahead of November Election
Polls show voters are likely to support adult-use cannabis ballot initiatives in most states.
Polling numbers vary, but the most recent results indicate that voters in the four states with recreational legalization on the ballot—Arizona, New Jersey, Montana and South Dakota—will vote in favor of legalization. A shift in public perception and potential tax revenue are two key reasons the measures are likely to succeed.
ARIZONA
In Arizona, Proposition 207 would legalize the sale and use of adult-use cannabis for those 21 and over. Possession would be limited to 5 ounces of cannabis, 1 ounce of THC concentrate and six plants per household. The Department of Health Services would regulate commercial sales. A 16% excise tax would be imposed on sales. The initiative would also allow individuals with certain cannabis-related crimes on their records to apply for expungement.
Two polls conducted in September came back with differing results, but demonstrated that the majority of voters are in favor of the measure. A poll conducted by Smart and Safe Arizona—the group behind the initiative—showed 57% in support and 38% in opposition. A separate poll conducted by Monmouth University showed 51% of respondents are in favor of the measure, with 41% in opposition. The remainder of voters are either undecided or not planning to vote on the measure.
MONTANA
In Montana, two initiatives are on the ballot. Initiative I-190 would legalize the sale and use of adult-use cannabis for adults who are 21 or older. Possession would be limited to 1 ounce of marijuana, provided that no more than 8 grams of that may be marijuana concentrate. In addition, residents would be allowed to have up to four cannabis plants and four cannabis seedlings per residence. The Department of Revenue would regulate commercial sales. A 20% tax would be imposed on sales. The initiative would also allow individuals serving prison sentences for cannabis-related crimes that are decriminalized under the new law to request expungement or resentencing. Initiative CI-118 would allow for the state to set a minimum age of 21 for the purchase of adult-use cannabis products. According to a Montana State University poll conducted between Sept. 15 and Oct. 2, 2020, 49% of respondents were in favor of the measure, with 39% opposing.
NEW JERSEY
In New Jersey, Public Measure No. 1 would legalize the sale and consumption of adult-use cannabis for those 21 and older. If the measure passes, limitations on the amount that may be possessed would be determined by regulators at a later date. Commercial sales would be regulated by the Cannabis Regulatory Commission. The former 6.625% statewide sales tax for medical cannabis would be imposed on adult-use sales (medical taxes were lowered to 4% on July 1 and will be further reduced until medical sales will not be taxed in July 2022). Localities will have the option to add on another 2% tax. The most recent poll results from law firm Brach Eichler LLC, which were released in late October, showed 65% of respondents in favor of the measure, with 29% opposing it.
SOUTH DAKOTA
In South Dakota, Constitutional Amendment A would allow for adult-use use and possession. Individuals would be allowed to possess or distribute up to 1 ounce of marijuana and commercial sales would be regulated by the State Department of Revenue. Individuals who live in an area without any cannabis retailers would be allowed to keep up to three plants, although not more than six plants would be allowed in any one residence. A 15% tax would apply to sales.
Although poll results commissioned by opponents of the measure and released in September indicated that 60% of respondents were in favor of the measure, recent poll results released in late October by Mason-Dixon Polling & Strategy show a closer race, with 51% in favor of the measure, 44 % opposing and 5% undecided. The state also has a medical cannabis measure on the ballot, and poll results show a higher level of support for that measure.
Currently, adult-use cannabis is legal in 11 states plus the District of Columbia. After the 2020 election, the likelihood of adding to this number appears almost certain. But, as more states move to legalize adult use, reaching a critical mass of states where recreational use is legal is expected to usher in changes at the federal level, as well.
Cannabis Business Times’ interactive legislative map is another tool to help cultivators quickly navigate state cannabis laws and find news relevant to their markets. View More