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.

© Michigan Supply & Provisions

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.

© Michigan Supply & Provisions

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.

A group of lawyers, research scientists, communications, and brand development professionals established the Hemp and Cannabinoid Science Institute this past August to facilitate the development of ingestible and topical hemp-derived cannabidiol (CBD) products. Underlying this effort is a push to comply with existing federal regulatory health and safety standards, providing the predictability to encourage rapid market growth.

The Institute’s founders, including Mary Wagner, president of food science consulting firm MK Wagner and Associates, said the Institute’s goal, in part, is to help industry participants avoid mistakes that have hindered the new hemp market.

Avoiding Previous Mistakes

For example, Wagner argues that cultivation and investment have outpaced the market due to a lack of established research and regulatory standards. Many people “put the cart before the horse” by trying to build a market without a proper foundation in science and agency approval, Wagner says. “There’s this lack of science, holes everywhere that’s causing this wild west environment,” she adds.

The Institute addresses this problem by working with the Food and Drug Administration (FDA), the U.S. Department of Agriculture, and other regulatory bodies to meet their standards. “The end goal for us is to get the FDA over the line” in approving hemp-infused consumer packaged goods (CPG), including food, beverages, nutraceuticals, and topicals, Wagner says.

“The plan for success will be much easier if we work with the FDA,” added Scott Riefler, founding member and the chief science officer of SōRSE Technology, a food technology company.

Not only do the Institute’s tactics ease the regulatory path, but they also help avoid other pitfalls, according to Wagner, Riefler, and Joshua Ashby, Institute member and cannabis law expert at Fox Rothschild LLP. “You don’t want to make this a political decision,” Wagner notes, or “get into a legal battle,” Ashby added.

The benefit of the Institute’s strategy is that it will help ensure a profitable market that will benefit farmers. “It’s a wonderful outlet market for the hemp farmers,” Riefler says. “These are high-value materials. It goes without saying that the hemp plant, the hemp crop, is worth a heck of a lot more for its cannabinoid content than for its fiber content.”

Wagner says the Institute is already communicating with various federal officials, including Frank Yiannas, the FDA’s deputy commissioner for Food Policy and Response, to understand what those officials need to approve CBD products.

FDA Press Officer Nathan Arnold responded to Hemp Grower that the agency, including Lowell Schiller, Principal Associate Commissioner for Policy, did have a listening session with the Institute on June 15.

As for the level of engagement beyond the meeting, Arnold provided the following statement,

“As part of our work, the FDA continues to explore potential pathways for various types of CBD products to be lawfully marketed. An important component of this work is obtaining and evaluating information to address outstanding questions related to CBD products that will inform our consideration of potential regulatory frameworks for CBD while maintaining the FDA’s rigorous public health standards. While we can’t comment on any specific meeting, we can confirm that FDA officials continue to meet with associations and other stakeholders who can share their perspectives on CBD products.”

Credibility and Experience

The Institute believes that their members’ background as scientists and consultants with decades-long relationships with relevant regulatory agencies provides credibility that previous efforts may not have had.  

Wagner and other members have decades spent in food and beverage research and development, including undertaking numerous FDA approvals. These members include such well-known experts as Peter Barton Hutt, senior counsel for Covington & Burling, LLP, a former chief counsel for the FDA, and food and drug law professor at Harvard University.

Cooperative Effort

The Hemp and Cannabinoid Science Institute is a nonprofit that pools resources using annual membership fees and contributions so that it is more affordable for companies to obtain necessary product research. The studies will not be proprietary, but instead will be available to anyone who wants the information, Wagner says.

This approach will benefit everyone by expanding the overall market, she adds. Pooling the funds “will raise the tide for everybody.”

These funds include the requirement for annual contributions to join the Institute’s management board and science council. For example, a seat on the board for two years requires $1 million, and it is $100,000 for a two-year term on the science council. Individuals can also join the Institute by paying annual membership dues. These dues range from $100,000 to $500.

Regarding the fees and dues, Riefler explains that “the nature of our work, such as developing unified nomenclature/standards of identity, test method development, toxicological studies, drafting or regulatory petitions, evolving plant genetics to name a few are expensive and often beyond the reach of any one organization. As we are not sponsored by a parent organization, we seek industry funding. It is customary to include some level of participation for major donors.”

He added that donations are not required to engage with the Institute. “Our Council is open to all stakeholders and those with interest, not just those donating.”

The Work Ahead

The Institute has already started its work, preparing a gap analysis for the FDA to determine where the science for CBD products falls short. Such an understanding is essential to get product approval and will include safety data, such as toxicity standards, Wagner says. This research is being undertaken to secure an FDA designation of Generally Recognized As Safe (GRAS) for packaged, ingestible CBD products.

Products that meet the GRAS standard under the Federal Food, Drug, and Cosmetic Act are not subject to premarket review and approval. According to the Act, products meeting this standard need to be “adequately shown to be safe under the conditions of its intended use.”

Another priority is addressing agency concerns about THC levels. Institute members believe that the current 0.3% THC standard is too high for ingestible products. The Institute wants to address this issue, in part, by focusing on plant genetics. The goal, Riefler says, is to find out how to modify hemp to reduce THC down to trace levels genetically.