Root & Bloom's Next-Mover Advantage

After spending seven years commuting between his home in Massachusetts and his job in Colorado, Tom Regan wasn’t necessarily looking to get back into the cannabis industry full time.

He had been one of the leaders of MiNDFUL, a Denver-based dispensary chain with origins in the state’s medical market, serving as president of the retail arm, as well as the vertically integrated company’s other brands, TR Concentrates and Link Brands.

In early 2021, he finalized an acquisition deal with LivWell, and after selling the company, he moved back East.

Once the year-plus process was complete, Regan says, “I was exhausted.” He took a break as he assessed his next step, imagining that he’d eventually launch a cannabis consultancy. In the meantime, he connected with Brad Kutcher and George Haseltine, commercial and residential developers who were building out a new grow, extraction and manufacturing facility to serve Massachusetts’s three-year-old, adult-use cannabis market. He started offering some advice and eventually signed on to be a consultant for Root & Bloom, a cultivation, extraction, manufacturing and distribution company based in Salisbury, Mass.

“Over the next year or so, [Kutcher and Haseltine] would come to me to ask questions or if I knew folks that could help. And a lot of the Colorado team and folks I knew in Massachusetts were becoming available,” Regan says. “So, I started to channel the best folks I knew over to the Root & Bloom side, and then finally in 2022, Brad and George asked me to join [as CEO], and it was just an incredible opportunity.”

One of the growers Regan helped recruit to Root & Bloom from Denver was William Windham, VP of Cultivation, who was one of the first people Regan met at MiNDFUL.

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“He joined [MiNDFUL] as a trimmer. He came from the restaurant industry and joined our company in probably one of the most entry-level jobs, and he worked his way through our organization and became the head cultivator,” Regan says, adding that other people he worked with had also signed on to the new company. “Once I met the team, I’m like, this is it. You don’t always get to choose who you get to work with. But the team was just so cool and down to earth and confident.”

With four-plus decades of cannabis experience among the veterans on the team, Regan says they were ready to take on the challenges of a new market.

A Competitive Edge

In cannabis, a lot of experts will note first-mover advantage. As state markets come online, the competition for licenses is fierce as prospective business owners do anything they can to stand out among often crowded applicant pools and complicated requirements. People gamble, making significant investments in the hopes of getting on the ground floor of an emerging, lucrative market, when prices are at their highest.

The Massachusetts Cannabis Control Commission approved Root & Bloom’s license in July 2020. By the time Root & Bloom’s products hit the Massachusetts market in October 2022, average wholesale cannabis prices were about $2,270 per pound versus the roughly $3,530 average cultivators were getting the year before, according to an August 2022 report from Cannabis Benchmarks. By January 2023, prices had dropped to $1,400, though they have since rebounded.

But Regan says there’s a lot of opportunity in the Massachusetts market. With its limited licensing model (each cultivation company can only operate up to three dispensaries, for example,) there’s room for smaller players, he says. There are now just over 120 approved, operational cultivation licenses in Massachusetts, a state with a population of nearly 7 million people that saw more than $1 billion in medical and adult-use sales in both 2021 and 2022. On Aug. 31, 2023, the program hit $5 billion in sales since the first adult-use dispensaries opened their doors in November 2018.

And Regan and Windham were used to the ups and downs of the industry. Colorado has experienced the most dramatic price compression of any adult-use state, and, despite the dip in the East Coast market, it had been years since cannabis had commanded the kind of prices Massachusetts companies were getting. This understanding of the price fluctuations that happen as a market matures, coupled with a state-of-the-art, custom-built cultivation and manufacturing facility, meant they could produce high-quality flower, vapes, prerolls and edibles for partners as well as its house brand efficiently and compete right away.

RELATED: Colorado’s Next Chapter: Still struggling amid market challenges, state cannabis operators say they hope the worst is behind them and are focused on strategies for a brighter future.

“We’re able to partner with folks to get brands out to the market that maybe wouldn’t be able to otherwise since they don’t have a facility and a license and a team like we do,” Windham says. At its launch, the company was in 40 dispensaries in Massachusetts; now they have surpassed 150. “We’re excited to be able to offer some pretty unique products and get into a lot of stores really, really quickly.”

Illuminating the Grow

The indoor cultivation facility helps the team of 75 veterans and “hungry” newcomers achieve these goals and avoid some of the growing pains of pioneering companies. The facility is split among two floors, with one clone room, one mother room, two veg rooms and four flower rooms on each level, with separate irrigation, HVAC, ductwork and other required systems for every single room. Systems are automated. Producing a high-quality, craft product is the priority, and preventing any pest or disease outbreaks that would get in the way of that was top of mind for the founders. Redundancies are built in—including a generator and a backup generator—to protect the crop.

After watching the evolution of horticultural lighting play out in Colorado, it was important to Regan and Windham that the entire facility be outfitted with top-of-the-line, energy-efficient light-emitting diodes (LEDs). Each of the eight 1,900-square-foot flower rooms is equipped with 99 fixtures.

By using LEDs and having separate veg rooms, Windham can give the crops more time in flower without cutting into efficiencies of the operation, which harvests about 150 pounds a week.

“We’re able to change the light cycle in veg into that 12/12 cycle to induce flowering. We can do that before we move our plants into a flower room because of the number of rooms and size of rooms we have here,” Windham says of the 20,000-square-foot canopy. “In other facilities where I’ve worked, we’ve had massive veg rooms, and we couldn’t put that room into 12 hours of darkness without impacting some other crops that also were in there.”

With one crop per veg room, growers are able to flip the room into flower weeks earlier, speeding up the time it takes to get cultivars to harvest, giving them flexibility and the ability to respond to the market more quickly.

They’re also able to work with genetics that can take longer to finish, some that other commercial growers may have discontinued because they need about 70 days to mature. They also have the ability to finish cultivars sooner if necessary, as the lights they are working with can push maturity up to 38 to 42 days. But quality, not speed, is the focus for Windham.

“That’s not how we use them, but the LEDs are definitely helping us achieve our goals of having the most beautiful, well-expressed flower that we can produce,” Windham says. “The bud structure, the color, the trichome coverage and maturity.”

It’s one of the reasons Windham pushed for additional lighting during the buildout, which initially called for 85 lights in each flower room.

“I don’t think you can have too much light available,” Windham says. “I would probably increase that by 50% if I could. One of the things that we learned early on is that we haven’t found the upper limit of how much light we can deliver to these plants yet.”

Regan says that by boosting intensity, yields have climbed.

“It’s been awesome and obviously that helps with the brand launch to be able to have high yields consistently,” Regan says. “It’s everything. A lot of times when you build a big facility like this, your costs are fixed. So if your yields go up, your cost per pound goes down, which makes you more competitive, gives you a bigger margin and it gives you the opportunity to pass those savings on to the customer. It’s a huge competitive advantage.”

When asked about what intensity Root & Bloom generally prefers and the company’s average yields, Windham says it varies by growth stage and cultivar, but they’re continuing to increase intensity even in early veg.

“I’ll say that the most important factor that I have found so far is getting that light intensity up as quickly as you can,” he says. “If we delay in that ramping, then the plant seems to have a hard time taking on that same intensity later in life. But if we can get the plant to take [intensity] early on in its life, then it seems to continue to be hungry for more and more, and we’re able to increase that.”

Looking Ahead

One of the limitations of today’s lighting—though Windham emphasizes how impressed he is with the speed of advancement and innovation of the past decade—is that cleaning fixtures isn’t simple.

Mitigating and preventing pests and diseases is crucial for any grow, and ideally, the Root & Bloom team would welcome new innovations to sanitize their lights between growth cycles, just like they do with their benches, floors and walls.

When Windham hires people, Regan says, “he tells them the job here is cleanliness, consistency and quality.”

An item on Regan’s wish list is more integration between the environmental control systems and LEDs and more information sharing between growers about target parameters that have worked best for them. But he has been impressed with how sophisticated the still relatively young adult-use Massachusetts market is.

“The most surprising thing about Massachusetts has been the speed at which the early industry has stepped forward. Things that took seven years in Colorado, I’m seeing happen here in two-and-a-half or three years,” Regan says. “It seems like a lot of the learnings from these prior states have been transported to Massachusetts.”

What drew Regan to the industry initially was that it felt like a technology startup, similar to what he was used to during his days at Cisco. And in many ways, it still is.

Windham says in order to thrive in this unpredictable space, it’s important to keep experimenting and improving best practices.

“We were able to bring a lot of lessons [from Colorado] here,” Windham says. ”Hiring folks who are hungry and want to learn and have a student mindset and just genuinely enjoy or get fulfillment out of hard work is really important to us.”

Michelle Simakis is editor-in-chief for Cannabis Business Times.