Interview, Part 1: Joe Caltabiano On Leaving Cresco Labs And Evolving Consumer PreferencesJune 23, 2020
Joe Caltabiano has been in the cannabis industry since co-founding Cresco Labs in 2013. In that time he served as president, building Cresco into a major player in the Illinois medical market. With the advent of recreational legalization this year, Cresco was one of the first companies awarded recreational licenses in Illinois. The company has also expanded into other states both as a producer and with its Sunnyside retail brand. In March, Caltabiano resigned from Cresco, saying his vision for the future could no longer be pursued within the company. SND assistant editor Danny Sullivan spoke with Caltabiano about that decision, his next moves, and where he sees the cannabis market headed moving forward.
SND: Where do you expect cannabis consumer preferences to gravitate in the next year or so?
Caltabiano: It’s odd because our initial assumption was that the market would move away from flower products and toward vape products and edibles. We’re starting to see data indicating that consumers are moving that way, but flower is still king. Companies can’t keep raw flower on the shelf in any of the limited license markets like Illinois, Pennsylvania, and Florida. You hear how fast the varietals of flower sell through the stores. They don’t typically run out of vape or edibles in the same way. So it’s still the dominant category, even in more nascent markets. Companies that can put out quality and consistent flower at an affordable price are going to ultimately have the ability to move consumers within their own house of brands into other categories by utilizing flower as the tip of the spear.
SND: What do you think is driving that loyalty to flower in the face of these new form factors?
Caltabiano: It’s the price point. You can buy your own flower to make your own edibles, which is a really easy process. But it’s very expensive to buy prepared edibles. People are paying $40 for 100 milligrams of edibles in some of these limited license markets; that’s expensive, especially if you’re truly utilizing cannabis for a daily regimen of helping you sleep, eat, and relax. So buying flower and making things oneself is a much more economical approach. It’s also a very familiar form factor for a lot of people that they’re comfortable with, because they know it’s nothing but the plant itself.
SND: What led you to leave Cresco?
Caltabiano: It’s always hard when somebody who founded a company decides to go in a different direction. We took advantage of a great program in Illinois to springboard one of the most important cannabis companies in the country, in my opinion. But when companies make decisions on future growth, it’s important that everyone is aligned with that vision. And the vision that the company had, of slowing down M&A opportunities and taking a more conservative approach, wasn’t exciting to me. My skill set revolves around constant motion—complex M&A transactions and taking advantage of opportunities as they arise. So when I saw the industry being starved for strong leadership and capital, I felt it was a good time to move on from an operational side of the business. We have a strong management team at Cresco so I felt comfortable moving away. I think the management team is very capable of executing on the vision, which is a more slow and steady approach, and in some examples it actually wins the race.
SND: What’s next for you?
Caltabiano: Firstly, I still carry a very significant amount of stock and voting shares in the company, and I’m very interested in its long-term success. But I’m still in an exploratory phase, looking at opportunities big and small. I’ll find a next opportunity that really challenges me personally and professionally in this industry that I love. I think it’s the most fascinating thing that I could ever be a part of in a lifetime.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.
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