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Interview: Part 2: Green Thumb Founder And CEO Ben Kovler

September 24, 2019

In the second part of our interview with Ben Kovler, the Green Thumb founder, chairman, and CEO discusses cultivation capacity, expansion plans, and the potential for social consumption of cannabis.

SND: How are you situated with cultivation capacity? Do you foresee additional investments on that front?

Kovler: We’re selling everything we make. We constantly need more product. When the rules change in a state like Illinois (which recently approved recreational sales), the market can become 10 times bigger overnight. You can’t build production capacity fast enough and you can’t hurry the plants along. So we have massive investments currently to build infrastructure and capacity. There are some markets where we don’t need to be growing ourselves, where we can source the active ingredients from other suppliers in order to formulate and make our brands. That’s our core strength—producing the branded cannabis products themselves. In markets like California we won’t need acres of grow operations, because there’s already tons of supply. But in other markets the supply chain and raw ingredients are still lacking. We’re building massive capacity right now in Illinois, Pennsylvania, New Jersey, and Massachusetts—those are high priority markets.

SND: Are there any markets you’re not currently in that are particularly attractive?

Kovler: Our business plan for the last four or five years has been summarized in the following: enter, open, scale. We have 31 open stores today, and our 32nd store will open in Pennsylvania later this month. We have the ability to open up to 95 stores currently with the licenses in our portfolio. Our newest market is Ohio. We opened three stores there this year. 2019 was the first time anybody purchased cannabis legally in Ohio, and we’re right at the forefront of that with three stores, one of which is in downtown Cleveland. That’s a market with 13 million people, and the momentum is strong. The next market for us on the retail side will be California. We won licenses in Pasadena, West Hollywood, and Culver City, which are highly coveted. We’ll open stores there in the second half of next year.

SND: Speaking of California, there’s been some talk about developing the social consumption landscape there. What’s your take on that?

Kovler: The license we won in West Hollywood actually includes a consumption lounge. California often serves as a laboratory, testing ideas for the rest of the country. My sense is that—because of the way U.S. capitalism, innovation, and investment work—it’s not going to look like Amsterdam. We’re not betting the company on social or onsite consumption, but we’re excited about the potential of it. We think it will come to Las Vegas and other places eventually as well.

SND: When do you expect to see overall profitability?

Kovler: Our revenue was $44.7 million last quarter, up 60% from the prior quarter. From a profitability perspective, what we watch is adjusted operating EBITDA, which was positive last quarter at over $5 million. So the core business actually is profitable now, and we’re going to continue to scale it.—Daniel Marsteller

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