Verano’s Preparedness Drives Anticipated Growth

Among the 18 states that have legalized adult-use cannabis, six are still in the regulatory period of finalizing their program frameworks before officially launching commercial sales. Those states are Connecticut, New Jersey, New Mexico, New York, Vermont, and Virginia.

For vertically integrated Verano, whose portfolio encompasses 15 states, with active operations in 12, including 12 production facilities comprising more than 1 million square feet of cultivation, founder and CEO George Archos says expecting and preparing for legislative and regulatory delays are key to ensuring growth.

Specifically, Verano’s footprint extends to two of the six states gearing for upcoming retail launches: New Jersey, which legalized adult-use cannabis through voter-approved Question 1 in November 2020, and Connecticut, which legalized adult-use via passage of Senate Bill 1201 in June 2021.

While Verano’s nearly 4,000 employees are also going through organic expansion phases in Florida, Nevada, and Massachusetts this year—not to mention the potential for additional M&A action—the company’s success in New Jersey and Connecticut depends heavily upon calculated moves riddled by launch dates, Archos tells Cannabis Business Times.

Tony Lange: What were the biggest challenges that Verano overcame in 2021?

George Archos: Legislative delays have been an issue for us, but we’re used to these hurdles. In the cannabis industry, although you might think a store might open on a certain date, it usually never works out that way. You have to wait for the regulator to come and inspect, there’s timing issues, etc. For instance, [in] New Jersey, we thought the adult-use rollout was going be in Q4 or even end of Q3 [2021]. Here we are [in] Q1 of 2022 and it still hasn’t happened. And legislative delays are tough for us because we anticipate something, and then you go through a construction process, then you go through a hiring and training process, and make sure you are ready for these things. There’s major costs associated with that. And then when it doesn’t happen, it’s a little bit of a letdown. It’s a burn on the capital side, and it’s something that we can’t control. But we’re used to it in this landscape. Those issues are also why we’re here—because we know how to overcome them.

TL: What is one key area where Verano anticipates growth in 2022?

GA: New Jersey and Connecticut should both be turning over to adult use this year. Obviously, we’re very excited about that. We’re putting the people in place, we’ve done an extensive amount of construction, all the training, and now we’re ready for the conversion. What we’re looking for now is to be able to participate in a successful program, make sure it launches and that there’s plenty of product for the consumers. And we’re ready to fulfill the obligation of being a grandfathered operator by making sure it’s an efficient, well-thought-out process. We don’t want long lines where people have to wait for hours. We want to make sure that we don’t run out of product.

TL: When a state launches an adult-use cannabis program, how do you make sure supply meets demand?

GA: We look at how many people are in that market, we look at how many operators there are, and then we kind of see where our niche is going to be. And we make sure we build out enough to where we don’t want oversupply, but we want to make sure there’s enough of our brands in the market. So, we started [additional] construction over a year ago for our New Jersey facility in preparation for adult use. (The facility is operational and supplying medical cannabis products in the state.) It’s a state-of-the-art, 120,000-square-foot facility that’s equipped with a production kitchen, production lab, big output, large canopy. We’re ready to go. We have multiple form factors and SKUs that we’ll be putting out of that facility, things that have been tested throughout the country that we know are successful, and the consumer likes and appreciates these products, and we’re excited to get them onto the market. Hopefully we see a late February start to the adult-use program in New Jersey, but we’re waiting, and we’ll be ready.

TL: What specific challenges do you forecast for the cannabis industry as a whole in 2022?

GA: Again, it goes back to the legislative delays. New Jersey and Connecticut, for example—when do they launch? How early do you start hiring? How early do you start the construction process? How far do you want to get ahead? Because this product does have shelf-life issues. [If] you start growing too much, then what? Now you have to destroy it. And there’s costs associated with that. Once you destroy it, you no longer have the product.

Tony Lange is associate editor of Cannabis Business Times and Hemp Grower.

This interview had been edited for length and clarity. Read the full interview here.